AU Data
- Monday 11.30 Producer Price Index for Q1 2008 previous 0.6%
- Wednesday 11.30 Consumer Price Index for Q1 2008 previous 0.9% q/q
- Wednesday 11.30 RBA Trimmed Mean CPI for Q1 2008 previous 1.0% q/q, 3.4% y/y
Last week, RBA minutes from the April 1 meeting noted that domestic demand was slowing as official and supplementary commercial bank rate increases hit consumers and businesses alike. Although Q1 inflation could hit an annualised 4%, the longer term outlook is more positive as tight monetary policy slowly feeds through to core figures. Housing (-5.9%) and Investment (-9.5%) Finance is certainly reflecting the slowdown scenario. This week PPI and CPI will hold centre stage.
NZ Data
- Monday 08.45 External Migration & Visitors for March previous 5.0%
- Monday 08.45 Permanent/long-term migration for March previous 170
- Thursday 07.00 RBNZ Official Cash Rate Decision current 8.25%
Retail Sales (-0.7% seasonally adjusted) were worse than market expectations with vehicle sales (-5.8%) particularly soft. However, headline CPI (+0.7% q/q) continues to climb, hitting an 18-month high in Q1; oil and food costs continue to be the main drivers here and persistent price pressures give the RBNZ little scope to cut rates in 2008, despite falling business and consumer confidence. No change to the Official Cash Rate is expected on Thursday.
US Data
- Monday 22.30 Chicago Fed National Activity Index for March previous -1.04
- Wednesday 00.00 Existing Home Sales for March previous 2.9%
- Wednesday 00.00 Richmond Fed Manufacturing Shipments Index for April previous 13.0
- Wednesday 00.00 Richmond Fed Services Index for April previous -5.0
- Thursday 22.30 Durable Goods Orders for March previous -1.1%
- Friday 00.00 New Home Sales for March previous -1.8%
Last week highlighted the difficult position that the Federal Reserve finds itself in, as Producer Prices (+1.1% in March) advanced sharply but the general US economy, Retail Sales (+0.2%) and Housing Starts (-11.9%), continues to struggle. The Fed will find it hard to justify further large interest rate cuts while input prices pressure headline CPI inflation. Equity markets took some hope from JP Morgan and Citibank results that suggested that the worst of the financial crisis is over; the Dow Jones ended the week +4.25%. This week the Chicago Fed Index will be watched closely and the volatile Durable Goods figure may fuel some activity.
JPN Data
- Monday 10.50 Tertiary Activity Index for February previous 3.1%
- Wednesday 10.50 Trade Balance for March previous 0.9%
- Wednesday 10.50 Exports for March previous 8.7%
- Wednesday 10.50 Imports for March previous 10.1%
- Thursday 10.50 All Industries Index for February previous 0.0%
- Friday 10.30 CPI Core Nationwide for March previous 1.0%
Consumer Confidence worsened in March from three months earlier (36.5 seasonally adjusted), which is the lowest since June 2003. The BOJ acknowledged that rising energy and raw material prices and a weak US economy will slow the domestic economy but remain resolutely impassive on interest rate stimulus. Indeed the next move on official rates is still expected to be higher in 2009. Export data will be studied for further evidence of any decoupling from the US in favour of local and European markets.
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 |
20th May |