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UK Data  

• Monday 9.30am Industrial Production for August previous -0.1%m/m
• Monday 9.30am Manufacturing Production for August previous -0.3%m/m
• Monday 9.30am PPI Input and Output for September previous 0.7%y/y and 2.5%y/y
• Tuesday 9.30am Trade Balance for August previous -£7bn
• Thursday 12.00am RICS Housing Survey for September previous -1.8 3m%bal

The Bank of England conformed to market expectations when they met last week and kept interest rates unchanged at 5.75%. With markets still pricing in a high probability of a rate cut before year end, attention now turns to the release of the minutes due in two weeks time for an understanding of the committee’s thoughts on the UK economy. Data last week, was generally disappointing highlighting weakness in both the manufacturing and service sectors. Whilst both are still expanding, the latter showed its lowest reading since August 2006 highlighting that higher borrowing costs coupled with recent market turmoil are having an adverse impact on the UK economy. With the housing market still the en vogue topic, the market will pay close attention to this week’s RICS housing survey for any further signs of suffering in the sector. Also of interest will be PPI data to see whether inflationary pressures at the factory gate will cause a headache for the MPC.
 

US Data

• Tuesday 7.00pm FOMC release minutes from prior meeting
• Thursday 1.30pm Import Prices for September previous -0.3%m/m
• Thursday 1.30pm Trade Balance for August previous -$59.2
• Friday 1.30pm PPI for September previous -1.4%m/m
• Friday 1.30pm Retail Sales for September previous 0.3%m/m
• Friday 3.00pm University of Michigan Sentiment Survey for October previous 83.4

The focus last week was on the employment report where we saw a stronger than expected 110k jobs created outside the agricultural sector. However, possibly of greater significance was the revision for August from -4k to +89k. The news will reduce the pressure on Fed to cut rates when they meet again at the end of this month. Whilst the initial reaction was one of Dollar strength, it proved to be short lived as the speculative market looked to take profit at the end of the week. The main highlight this week will be Friday’s retail sales figures to gauge the impact of the downturn in the US housing market on the rest of the economy.  

EU Data 

• Thursday 10.00am EU GDP for Q2 previous 2.5%y/y
• Friday 10.00am EU Industrial Production for August previous 0.6%m/m

The ECB kept rates on hold at 4.00% [as expected] at last week’s meeting, however the key was in the accompanying statement where Trichet stated that risks to the economy remain to the downside amid market uncertainty. Whilst this is the case, he indicated that risks to inflation remain to the upside thus suggesting the outlook for EU interest rates remains neutral for the months ahead. The highlight this week on a sparse data calendar will be EU GDP figures for a health check of the European economy.

Interest rate outlook