AU Data
- Tuesday 11.30 NAB Business Confidence previous -32
- Wednesday 10.30 Westpac Consumer Sentiment previous -4.6%
- Wednesday 11.30 Home Loans previous 6.4% m/m
- Thursday 11.00 Melbourne Institute Inflation Expectations previous 2.3%
- Thursday 11.30 Employment Change previous 1.2k
- Thursday 11.30 Unemployment Rate previous 4.8%
The RBA left rates unchanged at 3.25% last week but the pressure to reduce rates over the coming months continues to build; the official rate at 2.0%, by mid-year, is widely anticipated. Retail Sales (+0.2% m/m) and the Melbourne Institute Inflation Gauge (+0.7% m/m), both released prior to the meeting, may have lulled the RBA into thinking that the domestic economy was indeed holding up quite well, and that there was time to for them to take their preferred course of waiting to see how the current fiscal and monetary stimulus packages were feeding into the real economy. The data that followed the decision only highlighted the breadth and speed that the Australian economy is reacting to global events. Q4 GDP slumped 0.5% q/q as inventories were run down at the fastest pace in more than 20 years; Building Approvals fell for the 7th straight month by 3.7% m/m and the Australian Industry Group’s releases on Services (32.2) and Construction (29.5) activity showed the pace of contraction accelerated in February. The data this week is unlikely to be any less gloomy, culminating in the Unemployment Rate on Thursday.
NZ Data
- Wednesday 08.45 Overseas Trade Index previous -2.3% q/q
- Thursday 07.00 RBNZ Interest Rate Decision current 3.5%
- Thursday 07.00 RBNZ Monetary Policy Statement
- Thursday 08.30 Business NZ Manufacturing Index previous 42.0
- Thursday 08.45 Food Price Index previous 0.8% m/m
- Friday 08.45 Core Retail Sales previous -0.6% m/m
Amongst all the economic gloom from both the domestic and global economy a ray of light may be coming from New Zealand’s hard pressed property market. Real Estate Agent Harcourts reported traffic on its website had received 165,919 hits in February, the second straight monthly increase and the most since March 2007. Other anecdotal evidence showed buyers in Auckland returning to the market in February, with sales up 8.9% from the previous month and the average price increasing by 3.5% from February 2008. This week’s attention will be focused on the RBNZ’s interest rate decision on Thursday and any further evidence of the economy stabilising from the Manufacturing Index and Retail Sales.
US Data
- Wednesday 01.00 IBD/TIPP Economic Optimism previous 44.6
- Wednesday 01.00 Wholesale Inventories previous -1.4% m/m
- Thursday 05.00 Federal Budget Balance previous -83.8b
- Thursday 23.30 Core Retail Sales previous 0.9% m/m
- Thursday 23.30 Unemployment Claims previous 636k
- Friday 01.00 Business Inventories previous -1.3% m/m
- Friday 23.30 Trade Balance previous -39.9b
- Friday 23.30 Import Prices previous -1.1% m/m
- Saturday 00.55 Preliminary UoM Consumer Sentiment previous 56.3
- Saturday 00.55 Preliminary UoM Inflation Expectations previous 1.9%
Non-farm Payrolls fell 651k in February as the US economy continues to shed jobs at a rate not seen for 60 years. There appears to be no end in sight to the recession that has already seen over 4 million people lose work since December 2007. The Unemployment Rate jumped to 8.1%, worse than expected and the highest level since December 1983. The 10-year US Treasury note yield rose to 2.84% (from 2.81% the previous day) as the market starts to discount further fiscal stimulus, on top of the $787 billion already approved, that will inevitably be financed through federal debt sales. Last week’s other data gave very little encouragement, only that the pace of decline may be starting to slow but certainly not turning round. The Manufacturing PMI steadied at 35.8 (previous 35.6), Personal Spending rose by 0.6% m/m and Factory Orders ‘only’ fell 1.9% m/m versus expectations of a 3.5% decline. Construction Spending remains severely depressed falling 3.3% in January to its lowest level since June 2004. Retails Sales, a main driver of the economy, will be watched this week but in the current environment any positive number would be a surprise.
JP
N Data
- Monday 10.50 Bank Lending previous 3.7% y/y
- Monday 10.50 Current Account previous 0.50t
- Monday 16.00 Economic Watchers Sentiment previous 17.1
- Tuesday 16.00 Leading Indicators previous 80.0%
- Tuesday 17.00 Preliminary Machine Tool Orders 84.1% y/y
- Wednesday 10.50 Core Machinery Orders previous -1.7% m/m
- Wednesday 10.50 Corporate Goods Price Index previous -0.2% y/y
- Thursday 10.50 Final GDP previous -3.3% q/q
- Thursday 10.50 Final GDP Price Index previous 0.9% y/y
- Friday 15.30 Revised Industrial Production previous -10.0% m/m
- Friday 16.00 Household Confidence previous 26.4
Capital Spending on plant and equipment fell 17.3% in Q4 2008 from a year earlier, worse than market expectations (-16.6%) and followed a 13.0% drop the previous quarter. The worsening rate of capital expenditure does not bode well for final Q4 GDP on Thursday, with preliminary data already showing the economy shrank at the sharpest pace since the first oil crisis in 1974. The market will be watching more forward looking data this week with release of Preliminary Machine Tool Orders, Core Machinery Orders and Household Confidence but expectations for any improvement in the outlook are negligible at the very best.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| AUS (RBA) |
3.25% |
-100bps |
03/02/09 |
7th April |
| NZ (RBNZ) |
3.50% |
-150bps |
29/01/09 |
12th March |
| US (FED) |
0-0.25% |
-75bps |
16/12/08 |
17th March |
| JPN (BOJ) |
0.10% |
-20bps |
19/12/08 |
18th March |