UK Data
- Monday 9.30am CIPS Manufacturing PMI for March previous 55.4
- Wednesday 9.30am CIPS Services PMI for March previous 57.4
- Thursday 9.30am Industrial production for February previous +0.1% m/m
- Thursday 9.30am Manufacturing production for February previous -0.2% m/m
- Thursday 12.00pm BoE MPC interest rate decision
The highlight for this week will be the Bank of England interest rate decision. Since the Old Lady has developed a willingness to proactively manage interest rates rather than wait for the acknowledgement from the City, there will certainly be some nervousness leading up to the decision on Thursday. With inflation remaining stubbornly high at 2.8% and data overall remaining buoyant, Mervyn King has certainly made it clear that interest rates still need to go higher. The only question is whether they act now or wait for next month. We favour the latter; however it’s a close call.
US Data
- Monday 3.00pm ISM Survey for Manufacturing for March previous 52.3
- Tuesday 3.00pm Pending Home Sales for February previous -4.1% m/m
- Wednesday 3.00pm ISM Survey for Services for March previous 54.3
- Friday 1.30pm Non-farm Payrolls for March previous 97k
- Friday 1.30pm Unemployment rate for March previous 4.5%
Bernanke last week had to put his foot down and show everyone that he is now the boss, after comments from Greenspan. He clarified the situation by saying that the Fed has not shifted away from an inflation bias and policy still oriented towards controlling inflation. The data remains mixed with the Fed favoured PCE index coming in at +0.4% for the month, citing stubborn inflation pressures, whereas new homes sales dropped by 3.9% to their lowest level in 7 years. The highlight for this week will be on Good Friday with another round of employment data from the US in terms of the non-farm payrolls.
Euro Data
- Monday 9.00am Manufacturing PMI for March previous 55.6
- Wednesday 9.00am Services PMI for March previous 57.5
The Eurozone economy continues to moderately improve and this was highlighted last week by the IFO business sentiment survey that came in above expectations at 107.7, despite a stronger Euro and increasing oil prices. For this week the PMI data is expected to complement the improvement in the Eurozone economy and to strengthen the argument that interest rates need to tighten further to 4.00%.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK(MPC) |
5.25% |
+25bps |
11/01/07 |
5th Apr |
| US (FED) |
5.25% |
+25bps |
29/06/06 |
9th May |
| EU (ECB) |
3.75% |
+25bps |
08/03/07 |
12th Apr |