Economic Calendar - Week Starting 4 October 2010

Here's the Economic Calendar for the week commencing the 4th of October 2010. This week the main events are in the monetary policy and employment space. Firs up there's Japan with its monthly monetary policy meeting, then the RBA in Australia is expected to re-commence tightening, then the ECB and Bank of England meet on Thursday. On the employment front there's data from Australia, Canada, and the US with the much watched non-farm payrolls report. Also this week, the IMF will release its World Economic Outlook forecasts and commentary on Wednesday, shortly before the IMF annual meetings kick off in the coming weekend.

(More commentary follows the table)

Day	Time (GMT)	Code	Event/Release	Forecast	Previous
MON	EUR	09:00	Euro-Zone Producer Price Index (YoY) (AUG)	3.7%	4.0%
MON	USD	14:00	Pending Home Sales (YoY) (AUG)		-20.1%
MON	USD	14:00	Factory Orders (AUG)	0.0%	0.1%
MON	JPY		Bank of Japan Rate Decision (OCT 5)	0.10%	0.10%
MON	AUD	00:30	Retail Sales s.a. (MoM) (AUG)	0.4%	0.7%
MON	AUD	00:30	Trade Balance (Australian dollar) (AUG)	2300M	1888M
MON	AUD	03:30	Reserve Bank of Australia Rate Decision	4.75%	4.50%
TUE	CHF	07:15	Consumer Price Index (YoY) (SEP)	0.3%	0.3%
TUE	EUR	07:55	German PMI Services (SEP F)	54.6	54.6
TUE	EUR	08:00	Euro-Zone PMI Services (SEP F)	53.6	53.6
TUE	EUR	08:00	Euro-Zone PMI Composite (SEP F)
TUE	GBP	08:30	Purchasing Manager Index Services (SEP)	51.0	51.3
TUE	EUR	09:00	Euro-Zone Retail Sales (YoY) (AUG)		1.1%
TUE	USD	14:00	ISM Non-Manufacutring Composite (SEP)	52.0	51.5
TUE	USD	21:00	ABC Consumer Confidence (OCT 3)		-46
WED	EUR	09:00	Euro-Zone GDP s.a. (YoY) (2Q F)		1.9%
WED	EUR	09:00	Euro-Zone GDP s.a. (QoQ) (2Q F)	1.0%	1.0%
WED	EUR	10:00	German Factory Orders s.a. (MoM) (AUG)	1.0%	-2.2%
WED	USD	12:15	ADP Employment Change (SEP)	20K	-10K
WED	CAD	14:00	Ivey Purchasing Managers Index (SEP)	62.0	65.9
WED	GBP		NIESR GDP Estimate (SEP)		0.7%
WED	AUD	00:30	Employment Change (SEP)	20.0K	30.9K
WED	AUD	00:30	Unemployment Rate (SEP)	5.1%	5.1%
THU	GBP	08:30	Industrial Production (YoY) (AUG)	4.2%	1.9%
THU	EUR	10:00	German Industrial Production (YoY) (AUG)		10.9%
THU	GBP	11:00	Bank of England Rate Decision (OCT 7)	0.50%	0.50%
THU	GBP	11:00	Bank of England Asset Purchase Target	200B	200B
THU	EUR	11:45	European Central Bank Rate Decision (OCT)	1.00%	1.00%
THU	USD	12:30	Initial Jobless Claims (OCT 2)	453K	453K
THU	USD	19:00	Consumer Credit (AUG)	-$3.0B	-$3.6B
THU	CNY	02:30	China HSBC Services PMI (SEP)		57.6
FRI	EUR	06:00	German Exports s.a. (MoM) (AUG)	-0.8%	-1.6%
FRI	EUR	06:00	German Imports s.a. (MoM) (AUG)	0.4%	-2.2%
FRI	GBP	08:30	Producer Price Index Input n.s.a. (YoY) (SEP)	8.6%	8.1%
FRI	GBP	08:30	PPI Output Core n.s.a. (YoY) (SEP)	4.3%	4.6%
FRI	CAD	11:00	Net Change in Employment (SEP)	10.0K	35.8K
FRI	CAD	11:00	Unemployment Rate (SEP)	8.0%	8.1%
FRI	USD	12:30	Change in Non-farm Payrolls (SEP)	5K	-54K
FRI	USD	12:30	Average Hourly Earning All Employees (MoM)	0.2%	0.3%
FRI	USD	12:30	Change in Private Payrolls (SEP)	82K	67K
FRI	USD	12:30	Unemployment Rate (SEP)	9.7%	9.6%
FRI	USD	12:30	Average Weekly Hours All Employees (SEP)	34.2	34.2
	All		IMF Meetings

Starting off with the monetary policy events, the Bank of Japan of course wont touch interest rates, if anything they might look to do additional stimulus to get the economy moving and attack the persistent deflation problem - it will also be interesting to see what they say about the yentervention . The Reserve Bank of Australia will also come firmly into the spotlight as the consensus is growing toward seeing another interest rate increase... remember this time last year it kicked off the tightening cycle - dejavu anyone? The ECB probably wont do much, but it always puts out some insightful commentary, and the Bank of England could well release more stimulus - in preference of addressing the economic growth risks vs the inflation risks.

On the jobs front, Australia is up first, and is expected to show jobs growth around 20k vs 30.9k in August, as the lucky country's economy goes from strength to strength on the back of a strong resources sector that is likely to only grow in strength (as long as commodity prices stay right... and the Aussie dollar for that matter). In Canada it's a similar story, the resources sector is going strong and jobs growth is expected to come in at 10k vs 35.8k in August. Meanwhile in the US, consensus is for about 5k on the headline payrolls figure vs -54k in Aug, while the private payrolls number is expected to be about 82k vs 67k in Aug... still nothing to write home about in the context of the net negative jobs growth over the past decade.

Elsewhere there's a few data points out on Germany this week including the PMI numbers, factory orders (expected to increase), industrial production, and exports and imports data. There's also producer price index info from the EU and UK. Also among the remaining PMI data to be released this week for September, there's the US non-manufacturing composite, and the China HSBC services PMI; both of which will be critical data points to be across in terms of monitoring the two largest economies. In the US there's also consumer credit data due out for August, as well as pending home sales and the ABC consumer confidence index.

Another interesting feature of this week will be the IMF (International Monetary Fund), with the respected World Economic Outlook due to be released on Wednesday, and the IMF annual meetings in the coming weekend. While its unlikely to be too much more than a talk-fest, it will be worth monitoring what they have to say.

So as always, have a great week, watch out for surprises, and stay tuned for updates...

Sources
DailyFX www.dailyfx.com/calendar
Forex Pros www.forexpros.com/economic-calendar/
Forex Factory www.forexfactory.com/calendar.php
Bloomberg www.bloomberg.com
+various statistics websites and central bank websites for verification

Article Source: http://www.econgrapher.com/4oct-calendar.html

Monetary Policy Wrap-up 11 June 2010

In the past 48 hours we saw monetary policy decisions from New Zealand, Brazil, Europe, and UK. The New Zealand rate hike was as expected, the Brazilian one was too (though most probably didn't know it), the ECB and BoE non-decisions were also as expected. Following is a run down on each of the decisions and the current drivers of monetary policy in these four economies.


The chart above shows the path of the key policy rates for all of the central banks in question. The direction and magnitude of rates over the past couple of years should be no surprise to most, but this sets the scene for the following commentary.

Reserve Bank of New Zealand - increased 25bps to 2.75%
First up is the RBNZ, which raised the official cash rate to 2.75% from 2.50%, a move that was expected by most, and more or less flagged by the RBNZ in its previous monetary policy announcement. The RBNZ noted that the New Zealand economy is likely to expand 3.5% in the next two years on the back of export prices and volume growth, an improving labour market and a pick-up in residential and business investment.

The bank also noted that underlying CPI inflation is likely to track within its target range, even though headline inflation will be boosted by one-offs like the GST rate increase. The bank noted a possibility for a lower neutral policy rate in its announcement too:

“The fact that bank funding costs are higher, long-term interest rates are higher than short-term interest rates, and a greater proportion of borrowers use floating rate mortgages should all reduce the extent to which the OCR will need to be increased relative to previous cycles.”

Banco Central do Brazil - increased 75bps to 10.25%
The Brazilian central bank added another meaty chunk to the Selic rate, lifting it 75bps to 10.25% (having lifted it another 75bps from 8.75% not long ago. This comes just a day after Brazil announced its economy grew 9% year on year in the first quarter this year (albeit off a low base comparator period). Thus the main driver of the recent monetary policy decisions by the Banco Central do Brazil are about tackling potential overheating. Here's the English announcement from the Banco:

"Continuing the adjustment process of the monetary conditions to the forward-looking scenario of the economy, in order to ensure the convergence of inflation to the targets path, the Copom unanimously decided to increase the Selic target to 10.25 percent, without bias."

European Central Bank - no change at 1.00%
The ECB left its main interest rate unchanged at 1%, and this probably wont change in the near term. The Eurozone is currently to caught up with sovereign debt crises and contagion risks to worry about inflation in the near term, indeed - if anything the next move could even be down as a last ditch effort if things went even more downhill. But even if things stabilise the recovery in the EU is going to be very gradual, fragile, and uneven - as previously noted in past analysis. The ECB announcement is always very thorough, the key paragraph is:

"Based on its regular economic and monetary analyses, the Governing Council decided to leave the key ECB interest rates unchanged. The current rates remain appropriate. Taking into account all the new information which has become available since our meeting on 6 May 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon. Global inflationary pressures may persist, while domestic price pressures are expected to remain low. The latest information has also confirmed that the economic recovery in the euro area continued in the first half of 2010, but quarterly growth rates are likely to be rather uneven.

Looking ahead, we expect the euro area economy to grow at a moderate pace, in an environment of continued tensions in some financial market segments and of unusually high uncertainty. Our monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. Overall, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. Inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term. The firm anchoring of inflation expectations remains of the essence."

Bank of England - no change at 0.50%
The Bank of England left the key policy rate at 0.50% and made no adjustments to the asset purchase program, leaving the limit at GBP 200 billion. The BoE is unlikely to do anything in the near term (similar to the ECB) as the UK economy muddles along out of recession. In fact fiscal policy tightening in both the UK and Europe may end up capping inflation pressures somewhat in the near term. The characteristically brief announcement was:

"The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion."

That's all for now. The main theme is that monetary policy stimulus withdrawal continues to be uneven, with different paces matching different prospects, and rightfully so as the global economy looks more and more uneven.

Sources
Econ Grapher Analytics www.econgrapher.com
Reserve Bank of New Zealand www.rbnz.govt.nz
Banco Central do Brazil www.bcb.gov.br
European Central Bank www.ecb.int
Bank of England www.bankofengland.co.uk

Article Source: http://www.econgrapher.com/11june-monetarypolicy.html

Top 5 Graphs of the week

In this week's edition there are some key updates from around the globe. First up is a look at US consumer credit, followed by an update on EU unemployment, we then look at some data from the ISM PMI before noting recent policy settings of the Bank of England, and to finish it up there's a review of international trade data for New Zealand and Australia.

While there's no bridging theme for this edition some key points are; credit growth remains weighed down by challenging economic conditions and deleveraging; unemployment is still a problem though it may improve in the near term; activity is picking up in some areas thanks to the inventory cycle; monetary conditions are still very/historically loose, and developed nations are only very slowly seeing a turnaround in trade.

1. US Consumer Credit
The US consumer credit boom continued to unwind in November, dropping off by a record $17.5 billion in November. The drivers of this are likely to be a combination of attrition (due to consumers paying off debt and not replacing it and/or being unable to replace it due to credit availability and tightening of criteria -and- of course the ugly side where the consumer can't/wont repay and the loan gets written off) and falling credit quality/capacity (consumers facing little to no wage growth, higher unemployment, find it difficult to obtain new credit). I suspect the main driver is the attrition factor, driven a lot by the whole "deleveraging" phase as people look to restore balance sheets, and by the bad-debt element. Looking at the chart below, I think it's also interesting to note the proportion of revolving/non revolving loans over time.


2. Euro Area Unemployment Rate
An employment report on the EU showed the unemployment rate there reaching 10%; a level not seen in 11 years. The EU also released statistics confirming Q3 2009 growth of 0.4% q/q (or -4% year on year) last week. The number is lifted by members such as Spain and Ireland who are still in deep financial and economic trouble, as companies are still shedding jobs to try and control costs. The high level of unemployment will weigh on consumer spending and confidence, but at the same time there has been tentative growth signs in the EU, with the likes of Germany and France recording their 2nd in a row quarter of positive growth in Q3 last year. The near term outlook for the EU is for a subdued bounce-back in 2010-11.


3. US ISM Purchasing Managers Index
The core manufacturing PMI index stayed above the 50 point mark and touched levels not seen in years. As the chart below shows, a lot of it is being boosted/driven by a strong recovery in the new orders index which is a leading activity indicator. The ISM PMI is a very useful set of indices at the moment as you can see by cross checking the components that the inventory cycle is very much alive and well. The key is for the short-term impulse of the inventory cycle to flow on to more activity, i.e. a sort of jump start or wind-up for the economy. So watch this index over the next half year for signs of a passing over of the torch from inventory cycle to sustained activity.


4. Bank of England Monetary Policy
The Bank of England met again last week to set policy. As expected they kept the rate at 0.5% and kept the limit for the Asset Purchase Plan at GBP 200 billion. The BoE provide little information in their policy announcements but did mention the following: "The Committee expects the announced programme to take another month to complete. The scale of the programme will be kept under review.". The minutes of the meeting will be release on the 20th of January. This will be an interesting area to watch over the next year or so as activity picks up slowly in the UK, and it could well be that activity will remain very subdued there while inflation increasingly picks up, thanks in part to these monetary conditions.


5. Australasian Trade Stats
Australia released its trade statistics 2 weeks ago and NZ last week. Both countries reported slightly improved trade deficits as imports fell faster than exports. As seen below on a year on year % change basis both economies are still in the bottoming out phase. Both countries would gain strongly if they could boost exports, the trouble is they both tend to be the top of the list for the long side of the carry trade, and thus tend to have strong currencies. On the other hand both countries have strong commodities exposure (Australia more minerals, NZ more soft/agri commodities), and will over time gain from increasing volumes and prices.


Summary
To conclude this update, the charts above and analysis around them should add a little to your overall thinking about the global economy. The comments should lead you to think of some areas to watch that will impact how the recovery unfolds and ultimately how markets will be impacted. For instance monetary conditions remain loose in a lot of places, this has implications for how inflation tracks and around the eventual tightening.

On the inventory cycle there's the key area to watch of whether activity will be sustained after the initial burst. And then there's credit growth (for more on credit see my article on US bank lending), and international trade; credit growth will probably coincide with a more sustainable recovery, and international trade will be a vital element for recovery as well as giving clues to how global imbalances evolve.

Sources:
1. US Federal Reserve http://www.federalreserve.gov/econresdata/releases/statisticsdata.htm
2. Eurostat http://ec.europa.eu/eurostat
3. US ISM http://www.ism.ws/ISMReport/index.cfm
4. Bank of England http://www.bankofengland.co.uk/monetarypolicy/decisions.htm
5. Australian Bureau of Statistics http://abs.gov.au/ & Statistics New Zealand http://stats.govt.nz

Article Source: http://econgrapher.site1.net.nz/top5graphs10jan.html

Top 5 Graphs of the week

Econ Grapher's Top 5 Graphs of the Week.

This week the focus is on monetary policy. Last week we saw four central banks hold interest rates steady (UK 0.5%, Canada 0.25%, South Korea 2.00%, New Zealand 2.5%)... pretty much all well below their "neutral" levels. UK also kept its asset purchase plan unchanged at GBP 175 billion. The Chinese also released their key monthly economic metrics, including - in mon pol context - inflation (deflation) and money supply growth. The reason for focusing on monetary policy is two-fold, 1. there were a few interesting releases in this area, and 2. it's worth contemplating the impact of globally unprecedented loose monetary conditions both on the recovery and the bit that comes after the recovery...

1. Central Bank Balance Sheets
I took this chart from the OECD economic outlook update, simply because it stuck out to me. It charts the balance sheets of the central banks of the US, Japan, and Euro Area. It shows a drastic build up in US and EU, which is justified given that the financial markets froze up around that time, and it has gone someway into thawing them out. Questions this raises I think are: what are the next steps? how does it get unwound? what are the unintended consequences or side-effects of these measures?


2. China Money Supply
It's no secret that banks in China are lending like there's no tomorrow, and that monetary conditions are purposefully loose to match the large fiscal stimulus package. So too then can we see a marked up tick in the growth of money supply. I'm interested in the implications of this in terms of asset price speculation and inflationary pressures (which leads to the next chart).

3. China Inflation
Inflation in China has been driven hard by the commodities boom and bust. With both the crash of commodity prices and the global recession China has seen a few months of deflation. The August figure of -1.2% was less than -1.8% in July (dis-deflation?), which paired with hyper-stimulatory conditions could certainly herald a bottoming out of deflation/inflation in China. If pinned down, considering the large fiscal and monetary simulus in China I would pick that this will start ticking up soon - and that the Chinese authorities may be hard pressed to do anything about it given the need to avoid the risk of a down economy (if winding back stimulus).

4. BoE Monetary Policy
The UK's Bank of England kept both it's key rate, 0.5%, and Asset Purchase Plan, GBP 175 bil, unchanged this time after keeping the rate steady last time and increasing the purchase plan last time (when the governor apparently wanted a larger increase to it). The UK probably needs this and more if possible given how hard it has been hit and the structural nature of its recession.

5. RBNZ Monetary Policy
The land of the Kiwis left their interest rate unchanged again at 2.5% after dropping it from around 8%. The statement pointed towards it remaining unchanged until mid 2010, given that the country is still in recession and that its currency is often targeted by carry traders it's probably a good thing for the export reliant island nation. The next move is probably up for this country and probably later rather than sooner (in spite of arguments for a decrease to try pull the currency down - though this argument is flawed as such a move would likely be counter-productive i.e. it would probably trigger greater inflation, which would require higher rates... get the picture).

-Econ Grapher

Sources:
1. OECD Interim Assessment: http://www.oecd.org/dataoecd/10/32/43615812.pdf
2. People's Bank of China
3. National Bureau of Statistics
4. Bank of England
5. Reserve Bank of New Zealand: http://rbnz.govt.nz/keygraphs/index.html