While hardly expecting anything quite as dramatic as the default of a
Eurozone member, an epic collapse in world trade, or a central banker telling
the world that "he has no Plan B as having a Plan B means admitting failure" in
the next several days, there are quite a few events in the coming week. Here is
Goldman's summary of what to expect in the next 168 hours.
From Goldman Sachs
Last week was the week of the Greek PSI and CAC. A sell-off early in the week on the perception that the PSI acceptance was low led to a similarly sharp rebound when it became clear that the PSI did in fact go through very smoothly, though CAC was triggered and the ISDA Determinations Committee declared the debt deal a "Credit Event", leading to the payouts under CDS contracts. However, despite the related swings in risk sentiment, most assets classes ended the week close to where they started.
Beyond the focus on Greece, the macro data was mixed with slightly better numbers than expected out of the US (payrolls and non-manufacturing ISM), but slightly disappointing numbers out of China.
There was a raft of monetary policy meetings last week, including a few surprises. Brazil cut rates by more than the expected 50bp from 10.5% to 9.75%. Together with more macro-prudential policies to slow capital inflows, the Real reacted with some notable weakness during the week. The other country surprising with lower rates was India. In an unexpected cut of the cash reserve ratio from 5.5% to 4.75% the RBI attempts to reduce a cash squeeze in the banking system.
In the upcoming week, central bank meetings will again be the focus, with the BOJ and FOMC announcing their decisions on the same day (Tuesday, 13th March). While expectations for a policy change by the Fed are very low, the BOJ meeting may be lot more interesting. As we discussed in the last FX Monthly, released last Thursday (March 8), a substantial further BOJ shift towards a more dovish stance could be important for the Yen. The BOJ is under intense political pressure to deliver more easing and has already partially given in to these pressures at the last meeting. However, while the Yen has weakened notably already, bond markets have barely reacted so far. This tension also seems to be well reflected by the substantial shift in speculative short Yen positions, which have accumulated in recent weeks as reported by Robin Brooks in his weekly IMM report. Please refer to last week's FX Monthly for a more in-depth discussion of our Yen stance.
Still within the category of central bank meetings, it is worth highlighting Norges Bank on Wednesday. Though we do not expect a rate change, Norway remains one of the few places where relatively front-loaded policy tightening is possible in response to the strong activity data recently and the risks of asset bubbles.
On the activity side, a number of releases will be of interest, like the Philly Fed and Empire surveys, US retail sales and industrial production.
Finally, from an FX point of view, we get the full US balance of payments, including the current account, which will allow an update on our key BBoP calculations for Q4. The US Treasury will also release the latest TIC data for January.
Mon 12th March
India IP (Jan): Consensus expects a rise to 2.1%yoy from last month’s 1.8%.
Russia CB Overnight Repo (date subject to change): We expect the CBR will hold rates steady at 5.25%, in line with consensus.
Japan Machinery Orders (Jan): We expect a rebound to +1.2% mom from the very weak December number at -7.1%. Foreign orders remain firm but we think they may fall short of December’s 5.6% growth, in part due to January seasonality.
Also Interesting: Malaysia Jan IP, Japan Jan New Orders
Tue 13th March
Mexico IP (Jan): We are forecasting 2.5%, below consensus of 3.2% and previous month’s 2.8%.
Czech Republic IP (Jan): We forecast 3.1% yoy, slightly above consensus of 2.8% yoy, above last month’s 2.0%.
US Retail Sales (Feb): Retail sales should show a solid gain in February given strong auto sales, mostly good same-store sales, and very mild weather. GS: +1.3% mom, consensus expects an improvement to 1.0% mom from 0.4%.
FOMC Meeting: We expect no change, in line with consensus.
BoJ Meeting: The BOJ took the market by surprise at its February MPM by (1) increasing its Asset Purchase Program budget by 10 trillion yen and (2) citing a 1% CPI inflation goal “for the time being”. Political pressure has not abated since the February MPM. At this week's MPM we expect the BOJ to extend its Fund Provisioning to Strengthen the Foundations for Economic Growth, since this is due to expire at the end of March. We also think reference will be made to the pace of upcoming asset purchases.
ECB Draghi Speech
Ecofin Meeting
Also interesting: CPI (Feb) from France, Spain, Italy, Sweden, Poland, and Hungary.
Wed 14 March
Euro area CPI (Feb): Consensus expects a slight increase to February inflation, 2.7% from 2.6% yoy.
Euro area IP (Jan): Consensus expects further contraction of -0.8%, compared with last month’s -2.0% yoy.
United States CA (Q4): We expect a slight widening of the current account deficit on the back of larger than expected trade deficits in Q4. GS: -$119 bn, consensus expects -$114.2 bn, widening from -$110.3 bn.
Norway CB meeting: Consensus expects no change from 1.75%.
Fed’s Benanke Speech
Also interesting: Hungary Jan IP
Thu 15 March
Chile CB meeting: We forecast that rates will remain at 5.00% yoy – the CB pausing while maintaining an easing bias. Consensus is 5.00%.
SNB Meeting: We expect no change from 0.00%, in line with consensus.
India Central Bank Meeting: We expect rates will remain on hold at 8.5% in line with consensus.
US Empire Manufacturing: Consensus forecasts 17.4, against the previous value 19.5.
US Producer Prices (Feb): Producer prices probably received a headline boost in February. GS: +0.37, at 0.5% mom, consensus is up from the previous value +0.1% mom.
US TIC Data (Jan): As always, we will look at the quality of capital inflows into the US. TIC portfolio inflows have recently been geared towards inflows into US treasuries, while US investors tend to be pretty systematic buyers of foreign stocks and bonds. Last +$17.9 bn.
US Philadelphia Fed Survey (Mar): We project an unchanged reading of the Philadelphia Fed survey in March (+10.0). Consensus is up to 11.0 from 10.2 last month.
Also interesting: Israel Feb CPI.
Fri 16 March
Mexico overnight rate: We expect the CB to maintain the rate at 4.50% yoy, in line with consensus.
Russia IP: Consensus expects 4.4%yoy up from 3.8%.
US Consumer Prices (Feb): Consumer prices probably received a headline boost in February, while we expect a moderation in core inflation measures. GS: +0.45%, consensus expects 0.4% mom, slightly up from 0.2%.
US IP (Feb): We expect industrial production to benefit from strong gains in vehicle output. GS: +0.6% mom, consensus expects 0.4%, up from 0.0% last month.
U. Michigan Consumer Sentiment: Consensus expects a slight increase to 75.6 from 75.3.
From Goldman Sachs
Last week was the week of the Greek PSI and CAC. A sell-off early in the week on the perception that the PSI acceptance was low led to a similarly sharp rebound when it became clear that the PSI did in fact go through very smoothly, though CAC was triggered and the ISDA Determinations Committee declared the debt deal a "Credit Event", leading to the payouts under CDS contracts. However, despite the related swings in risk sentiment, most assets classes ended the week close to where they started.
Beyond the focus on Greece, the macro data was mixed with slightly better numbers than expected out of the US (payrolls and non-manufacturing ISM), but slightly disappointing numbers out of China.
There was a raft of monetary policy meetings last week, including a few surprises. Brazil cut rates by more than the expected 50bp from 10.5% to 9.75%. Together with more macro-prudential policies to slow capital inflows, the Real reacted with some notable weakness during the week. The other country surprising with lower rates was India. In an unexpected cut of the cash reserve ratio from 5.5% to 4.75% the RBI attempts to reduce a cash squeeze in the banking system.
In the upcoming week, central bank meetings will again be the focus, with the BOJ and FOMC announcing their decisions on the same day (Tuesday, 13th March). While expectations for a policy change by the Fed are very low, the BOJ meeting may be lot more interesting. As we discussed in the last FX Monthly, released last Thursday (March 8), a substantial further BOJ shift towards a more dovish stance could be important for the Yen. The BOJ is under intense political pressure to deliver more easing and has already partially given in to these pressures at the last meeting. However, while the Yen has weakened notably already, bond markets have barely reacted so far. This tension also seems to be well reflected by the substantial shift in speculative short Yen positions, which have accumulated in recent weeks as reported by Robin Brooks in his weekly IMM report. Please refer to last week's FX Monthly for a more in-depth discussion of our Yen stance.
Still within the category of central bank meetings, it is worth highlighting Norges Bank on Wednesday. Though we do not expect a rate change, Norway remains one of the few places where relatively front-loaded policy tightening is possible in response to the strong activity data recently and the risks of asset bubbles.
On the activity side, a number of releases will be of interest, like the Philly Fed and Empire surveys, US retail sales and industrial production.
Finally, from an FX point of view, we get the full US balance of payments, including the current account, which will allow an update on our key BBoP calculations for Q4. The US Treasury will also release the latest TIC data for January.
Mon 12th March
India IP (Jan): Consensus expects a rise to 2.1%yoy from last month’s 1.8%.
Russia CB Overnight Repo (date subject to change): We expect the CBR will hold rates steady at 5.25%, in line with consensus.
Japan Machinery Orders (Jan): We expect a rebound to +1.2% mom from the very weak December number at -7.1%. Foreign orders remain firm but we think they may fall short of December’s 5.6% growth, in part due to January seasonality.
Also Interesting: Malaysia Jan IP, Japan Jan New Orders
Tue 13th March
Mexico IP (Jan): We are forecasting 2.5%, below consensus of 3.2% and previous month’s 2.8%.
Czech Republic IP (Jan): We forecast 3.1% yoy, slightly above consensus of 2.8% yoy, above last month’s 2.0%.
US Retail Sales (Feb): Retail sales should show a solid gain in February given strong auto sales, mostly good same-store sales, and very mild weather. GS: +1.3% mom, consensus expects an improvement to 1.0% mom from 0.4%.
FOMC Meeting: We expect no change, in line with consensus.
BoJ Meeting: The BOJ took the market by surprise at its February MPM by (1) increasing its Asset Purchase Program budget by 10 trillion yen and (2) citing a 1% CPI inflation goal “for the time being”. Political pressure has not abated since the February MPM. At this week's MPM we expect the BOJ to extend its Fund Provisioning to Strengthen the Foundations for Economic Growth, since this is due to expire at the end of March. We also think reference will be made to the pace of upcoming asset purchases.
ECB Draghi Speech
Ecofin Meeting
Also interesting: CPI (Feb) from France, Spain, Italy, Sweden, Poland, and Hungary.
Wed 14 March
Euro area CPI (Feb): Consensus expects a slight increase to February inflation, 2.7% from 2.6% yoy.
Euro area IP (Jan): Consensus expects further contraction of -0.8%, compared with last month’s -2.0% yoy.
United States CA (Q4): We expect a slight widening of the current account deficit on the back of larger than expected trade deficits in Q4. GS: -$119 bn, consensus expects -$114.2 bn, widening from -$110.3 bn.
Norway CB meeting: Consensus expects no change from 1.75%.
Fed’s Benanke Speech
Also interesting: Hungary Jan IP
Thu 15 March
Chile CB meeting: We forecast that rates will remain at 5.00% yoy – the CB pausing while maintaining an easing bias. Consensus is 5.00%.
SNB Meeting: We expect no change from 0.00%, in line with consensus.
India Central Bank Meeting: We expect rates will remain on hold at 8.5% in line with consensus.
US Empire Manufacturing: Consensus forecasts 17.4, against the previous value 19.5.
US Producer Prices (Feb): Producer prices probably received a headline boost in February. GS: +0.37, at 0.5% mom, consensus is up from the previous value +0.1% mom.
US TIC Data (Jan): As always, we will look at the quality of capital inflows into the US. TIC portfolio inflows have recently been geared towards inflows into US treasuries, while US investors tend to be pretty systematic buyers of foreign stocks and bonds. Last +$17.9 bn.
US Philadelphia Fed Survey (Mar): We project an unchanged reading of the Philadelphia Fed survey in March (+10.0). Consensus is up to 11.0 from 10.2 last month.
Also interesting: Israel Feb CPI.
Fri 16 March
Mexico overnight rate: We expect the CB to maintain the rate at 4.50% yoy, in line with consensus.
Russia IP: Consensus expects 4.4%yoy up from 3.8%.
US Consumer Prices (Feb): Consumer prices probably received a headline boost in February, while we expect a moderation in core inflation measures. GS: +0.45%, consensus expects 0.4% mom, slightly up from 0.2%.
US IP (Feb): We expect industrial production to benefit from strong gains in vehicle output. GS: +0.6% mom, consensus expects 0.4%, up from 0.0% last month.
U. Michigan Consumer Sentiment: Consensus expects a slight increase to 75.6 from 75.3.
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