FYI | Mar 12 2007
By Greg Peel
There had been fears that the US non-farm payroll number (new jobs created outside of farming) for February would disappoint, but at 97,000 it came in just shy of the 100,000 the market had been hoping for. Unemployment fell to 4.5%, allaying immediate fears of a recession at hand.
This was positive for a bruised Wall Street, but after a tumultuous couple of weeks the market was still nervous, weighed down by more concern over sub-prime mortgages, and a 2.5% drop in the oil price. Hourly earnings rose as well, which while healthy from an economic standpoint suggest a rate cut is not due anytime soon.
Such it was that the Dow struggled up 15 points and gold remained steady. It was all a bit Friday, and traders were no doubt keen to get home for a weekend rest.
More important data come out in the US this week, which will help decide if we’ve reached a consolidation point in the correction, or whether there might yet be some more weakness to squeeze out. Tuesday sees retail sales for February and business inventories for January.
Tuesday also has US Treasury secretary Paulson addressing the Capital Markets conference in Washington, which could be interesting. Wednesday brings the import price index for February and the elephant in the room of all US economic data – the quarterly current account balance.
But the fun really starts on Thursday, as we learn the purchasing price index (PPI) for February, and the March Philadelphia Fed survey of economic activity. Ex-Fed chairman Greenspan is due to make a speech again, and the world still hangs on the great man’s words. Thursday also sees the long-term Treasury International Capital (TIC) flows for January. This number is important in determining whether the world is putting its money into, or taking it out of, the US.
Another nervous Friday is then at hand when we see February figures for industrial production, capacity utilisation, and also the biggie – the consumer price index (CPI).
Australia has no less of an important data week, kicking off with January housing finance and quarterly EBA (enterprise bargaining agreement) wage trends on Monday.
Tuesday brings the February NAB business confidence survey and the ANZ job ads figures. Wednesday sees the Melbourne Institute consumer confidence survey for March, followed on Thursday by the Melbourne Institute inflation indicator.
But the major news on Thursday will be the labour force figures for February – employment, unemployment and participation rates.
Monday will be an important day in Japan. Japan is very much back in the frame at present as a nervous unwinding of carry trade positions has led to a jump in the yen against the US dollar. Ongoing Japanese monetary policy will be an influential factor, and Monday sees the release of the quarterly GDP, current account and trade balance figures.
How will the local bourse perform this week? Well we’ll start with a boost from the SPI Overnight up 23 points on Friday, despite falls across the board in base metal prices including a 3% drop in zinc. A 50% retracement of the correction looks healthy, but never discount the latent volatility in a trigger-happy market.