FYI | Aug 13 2007
By Greg Peel
This week sees the release of the UK, US and EU July CPI numbers on Tuesday, Wednesday and Thursday respectively. In any other world, economists would be looking for the same sorts of inflationary signs apparent in recent Australian data – signs which led the RBA to hike interest rates. But in this world, massive injections of liquidity into the global banking systems appear to many as precursors to the necessity to ease monetary policy. The BOE, Fed and ECB may well be on the horns.
Bernanke, for one, has warned about inflationary pressures – from sources such as oil and food – as late as last week. Hence there remained an upward bias to the Fed’s rate policy. But then we saw the actions of Thursday and Friday, leading the US interest rate futures market to price in a rate cut by year’s end. How will it respond if the CPI numbers are significant? Could the world be destined for stagflation?
US June business inventories are out tonight, but July retail sales will prove more telling. Tuesday brings the June trade balance and the July PPI. Wednesday ushers in a host of interesting data.
First is the June TIC flows, which measures the net amount of US dollar assets bought or sold over the month. While telling for the health of the US dollar, June now seems a long time ago. July industrial production and capacity utilisation will be more contemporary indicators, as will the August Empire manufacturing index and the August NAHB housing index. And then there’s the CPI.
Thursday sees the Philadelphia Fed report for August, and rather important July housing starts and building permits. Friday brings the Michigan University August consumer confidence level. Even that will take on newfound importance.
Australia’s week is a quiet one beyond today’s release of the RBA’s quarterly statement on monetary policy. Most economists are suggesting further interest rate hikes for Australia, and this statement will provide some clues. We have the July NAB business survey on Tuesday and Australia’s consumer confidence measure on Wednesday. Wednesday also brings the second quarter wage cost index, which will also be closely scrutinised, as will Thursday’s average weekly wages measure and consumer inflation expectations. Friday wraps up with July merchandise goods imports.
Aside form the UK and EU CPI numbers this week, we will also learn the Japanese second quarter GDP growth today, which has implications for whether the BOJ will or won’t go ahead with an interest rate hike which, in turn, has implications for the carry trade.
The Australian reporting season steps up a gear this week. All the details are available in the FNArena calendar.
If the markets will be anything this week, they won’t be dull. Strap yourselves in.
