AU Data
- Wednesday 11.30 Housing Credit for March previous 0.9%
- Thursday 11.30 Building Approvals for March previous 0.1%
- Friday 11.30 Retail Sales for March previous -0.1%
- Friday 11.30 Retail Trade for Q1 previous 1.6%
Last week headline consumer prices (+4.2%) and the RBA’s trimmed mean CPI (+4.1%) recorded higher than expected levels and remain significantly outside the RBA’s 2-3% target band. Quarter-on-quarter inflation continues to grind higher and shows little sign of falling back any time soon as fuel and food continue to drive retail price pressure. The RBA may well wait for another quarter of data before hiking rates again, especially as the retail banks continue to squeeze mortgage holders with independent interest rate increases. This week, Building Approvals and Retail Sales will give an indication of the pace of any slowdown in the domestic economy.
NZ Data
- Tuesday 08.45 Merchandise Trade for March previous NZD3.14b
- Tuesday 08.45 Trade Balance for March previous NZD-4.41b y/y
- Wednesday 08.45 Building Consents for March previous -6.5%
As expected, the RBNZ left Official Cash Rate unchanged at 8.25% and the post announcement statement acknowledged the slowing domestic economy. This may allow for an OCR cut later in 2008. Attention this week will be on Trade and Building data but the mass of economic data from the US will dominate market action.
US Data
- Tuesday 02.00 Midwest Manufacturing for March previous 101.0
- Wednesday 00.00 Consumer Confidence for April previous 64.5
- Wednesday 22.15 ADP National Employment for April previous 8k
- Wednesday 22.30 Personal Consumption Expenditure Price Index for Q1 previous 2.5%
- Wednesday 22.30 Employment Costs for Q1 previous 0.8%
- Wednesday 22.30 GDP Advance for Q1 previous 0.6%
- Wednesday 23.00 New York NAPM Index for April previous 425.8
- Wednesday 23.45 Chicago PMI for April previous 48.2
- Thursday 04.15 FOMC Rate Decision current 2.25%
- Thursday 21.30 Challenger Layoffs for April previous 53.576k
- Thursday 22.30 Core Personal Consumption Expenditure for March 2.0% y/y
- Friday 00.00 Construction Spending for March previous -0.3%
- Friday 00.00 ISM Manufacturing for April previous 48.6
- Friday 22.30 Non-farm Payrolls for April previous -80k
- Friday 22.30 Unemployment for April previous 5.1%
- Saturday 00.00 Factory Orders for March previous -1.3%
The FOMC rate decision will attract particular attention this week and although another 25 basis point cut is expected, the market is shifting expectations away from further sharp rate cuts as fuel and food prices drive US and worldwide inflation higher. Equity markets and the US$ have taken some positives from recent earnings releases with 63% of companies reporting, so far, better than expected earnings in Q1. Several oil and car companies report this week and any results at or above, albeit low, expectations will be taken as signs the worst is over for the US economy.
JPN Data
- Monday 10.50 Retail Sales for March previous 3.1%
- Wednesday 10.30 Unemployment Rate for March previous 3.9%
- Wednesday 10.30 Jobs/Applicant Ratio for March previous 0.97
- Wednesday 10.30 All Households Spending for March previous 0.0% y/y
- Wednesday 10.50 Industrial Output for March
- Wednesday BOJ Rate Decision currently 0.50%
- Wednesday16.00 Housing Starts for March previous -5.0% y/y
- Wednesday 16.00 Construction Orders for March previous 18.4% y/y
- Thursday 10.15 Manufacturing PMI for April previous 49.5
- Thursday 12.30 Overtime Pay for March previous 2.6% y/y
The BOJ rate decision and subsequent semi-annual economic activity and prices outlook will be watched closely for clues to the thinking of the Central Bank regarding inflation pressures and future monetary policy. The sluggish domestic economy will be balanced by serious concerns about the pressure of energy and food prices on domestic inflation; as reported last week core CPI grew at the fastest pace in a decade, however no change to official rates is expected this time around.
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 |
5th June |
| US (FED) |
2.25% |
-75bps |
18/03/08 |
30th April |
| JPN (BOJ) |
0.50% |
+25bps |
21/02/07 |
30th April |