AU Data
- Monday 11.30 ANZ Internet job Ads for March previous -2.2%
- Monday 11.30 Building Approvals for March previous 1.9%
- Monday 11.30 Trade Balance for February previous –A$ 2,723 mil
- Monday 11.30 Private House Approvals for February previous 2.7%
- Thursday 11.30 Unemployment for March previous 4.0%
As expected, the RBA left official rates unchanged and the post decision statement kept options open to raise rates further if global financial market conditions and slowing consumer confidence do not start to edge down inflation in the coming months. In a less than convincing testimony later in the week, RBA Governor Stephens could not give any assurances as to the time frame for rate and inflation targets to start to fall. He also appeared to endorse the actions of retail banks that have all increased lending rates over and above the official benchmark. Higher rates do seem to be taking effect though, as last week saw Manufacturing Activity (51.2 in March from 51.4) fall for the third straight month and Retail Sales (-0.1%) dip as borrowing costs and higher fuel erode disposable income. Trade data and Unemployment will attract attention this week.
NZ Data
- Tuesday 09.00 NZIER Confidence for Q1 previous -26.0%
- Wednesday REINZ House Sales for March previous -32.1%
The domestic economic landscape in NZ is changing fast and the prospect that interest rates will be cut before year end, providing this translates into slowing inflation, increased last week. Business Confidence (a 17 year low), Workers Confidence (Q1 2008 the biggest decline in the series history) and New Dwelling Approvals (-6.5% seasonally adjusted in February) all reflected the current high interest rate environment and falling confidence in global market conditions. Scant data this week for local markets but as ever the US will fill the breach with data and headlines to fuel debate.
US Data
- Tuesday 06.00 Consumer Credit for February previous $6.9 bln
- Wednesday 01.00 Pending Home Sales for February previous 0.0%
- Thursday 01.00 Wholesale Inventories for February previous 1.0%
- Thursday 23.30 International Trade for February previous -$58.2 bln
- Friday 02.00 MasterCard Spending Pulse for March previous -3.5%
- Saturday 00.55 University of Michigan Expectations for April 61.4
In a week where Non-farm Payrolls (-80K, third straight monthly fall) and Unemployment (5.1%, 2.5 year high) were worse than expected, and the Fed Chairman mentioned the ‘R’ word (recession) equity markets rallied. The Dow Jones climbed 3.22% and the USD crept off trading lows. Additionally, large write downs from several banks and successful capital replacement strategies helped buoy sentiment that the worst is over for the beleaguered financial sector. Some are far less convinced that this recession/slowdown will be short, rather that the continued effect of the credit crunch will last well into H2 2008. Leading indicators such as Wholesale Inventories and UoM Expectations this week will give a hint of growth prospects in the coming months. The markets are desperate for good news and spin cannot fuel positive sentiment for long without hard evidence.
JPN Data
- Monday 16.00 Leading Indicator for February previous 36.4
- Monday 16.00 Coincident Indicator for February previous 20.0
- Tuesday 15.30 Bankruptcies for March previous 1.7% m/m
- Wednesday Bank of Japan Rate Decision
- Wednesday 17.00 BOJ Economic Report for April
- Friday 10.50 Machinery Orders for February previous 19.6%
- Friday 10.50 Current Account for February previous 8.1%
- Friday 10.50 Trade Surplus for February previous -24.1%
Last week’s Tankan release for Q1 2008 saw business sentiment worsen more than expected in the past 3 months. The headline index for large manufacturers was +11, +19 previously, and worse than market expectations at +13. This is the second straight quarterly fall and the lowest since December 2003. Future business confidence was also weak, as measured by capital spending expectations, which showed large firms expect CAPEX to fall 1.6% in the financial year that commenced on April 1. Manufacturing Activity (49.5) contracted for the first time in 5 months and Industrial Output fell 1.2% in February. Although the BOJ will be cautious about domestic economic prospects, a cut in official rates is unlikely at this week meeting.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
7.25% |
+25bps |
04/03/08 |
6th May |
| NZ (RBNZ) |
8.25% |
+25bps |
26/07/07 |
24th April |
| US (FED) |
2.25% |
-75bps |
18/03/08 |
30th April |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
9th April |