UK Data
- Monday 12.00am Rightmove House Prices for February previous 13.5%y/y
- Tuesday 9.30am BBA Mortgage Lending for January previous £5.8bn
- Wednesday 9.30am BoE release minutes from prior MPC meeting
- Wednesday 11.00am CBI Industrial Trends Survey for February previous -9.0
- Friday 9.30am GDP for Q4 previous 3.0%y/y
Last week saw signs that inflationary pressures are easing in the UK with PPI Input (-1.7%y/y) CPI (2.7%y/y) and Average Earnings (4.0) all coming out below forecast, thus dampening down expectations of higher interest rates in the months ahead. However, there was some respite for Sterling from the quarterly inflation report where Mervyn King highlighted that interest rates will probably still have to rise at least one more time to keep inflation on track to hit its 2.0% target rate. This week, the market will look towards the MPC minutes from their meeting in January for confirmation of another hike and Friday’s GDP figures for confirmation of a robust UK economy.
US Data
- Monday – Market Holiday – Presidents’ Day
- Wednesday 1.30pm CPI for January previous 0.5%m/m
- Wednesday 7.00pm Fed release minutes from prior meeting
Data last week was generally disappointing with retail sales (0.0%m/m) Import Prices (-1.2%m/m) Industrial Production (-0.5%m/m) and the Philly Fed Survey (+0.6) all failing to meet the consensus forecast. The trade balance also widened to a deficit of $61.8bn as the oil price recovered and Americans imported record amounts of consumer goods. The main highlight however, was Bernanke’s testimony to the Senate where he stated that the economy may be stronger than previously thought however with inflationary pressures easing, it is unlikely that the Fed will be forced to raise rates in the near term. Consequently, attention turns to this week’s CPI figure and the release of the minutes from the Fed’s last meeting for confirmation that rates are likely to remain neutral in the months ahead.
Euro zone Data
The main highlights last week were EU GDP (2.7%y/y) and the German ZEW Survey (+2.9) both of which failed to live up to expectations. However, the EU trade balance showed a surplus of €2.5bn with an upward revision for November to €5.1bn from €3.1bn previously. The sole highlight on this week’s calendar is EU Industrial New Orders where the market will be looking for confirmation of a buoyant European economy.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK(MPC) |
5.25% |
+25bps |
11/01/07 |
8th Mar |
| US (FED) |
5.25% |
+25bps |
29/06/06 |
21st Mar |
| EU (ECB) |
3.50% |
+25bps |
07/12/06 |
8th Mar |