Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Economic Data to Confirm or Refute Continuing Financial Markets Optimism

Economics / Economic Recovery Oct 12, 2009 - 04:41 AM GMT

By: Lloyds_TSB

Economics

Best Financial Markets Analysis ArticleA sense of cautious optimism prevails in financial markets. And the week ahead is rich in economic data that will provide further clues on the pace of improvement in global economic conditions. Following September’s disappointing US non-farm payrolls and ISM manufacturing data, financial markets are likely to use this week’s releases to judge whether confidence has risen too far, too quickly. The latest monetary policy decision from the Bank of Japan is also due, where we look for the key overnight call rate to remain at 0.1%.


Sterling’s recent weakness has prompted concerns that despite the deeper downturn in the UK economy compared with various other countries, UK CPI may turn out to be relatively ‘sticky’. However, from a rate of 1.6% in the year to August, we look for an outturn of 0.9% in September, as last year’s energy-driven CPI increase falls from the annual comparison. Latest labour market data are also released this week, where we anticipate a 25k rise in claimant count unemployment, together with a further deceleration in pay growth.

Average earnings growth has been erratic since the end of last year, when the three-month annual growth rate stood at 3.0%. This mainly reflected negative ‘wage drift’ (e.g. from lower bonuses). But the consistent theme has been an excess supply of labour, and is likely to persist for some time, even as the economy enters a recovery phase. We look for average earnings to register growth of just 1.5% in August, versus 1.7% in July. Arguably most worrying for the UK economy is that bank credit provision to both households and firms remains constrained.

The Bank of England’s recent credit conditions survey, for example, revealed a worsening in the availability of secured credit to households during Q3. This appears to contrast with an expected further improvement in the RICS house price balance, scheduled for release on Tuesday. A lack of housing supply continues to be the most widely-cited explanation for the recent pick-up in house price indices.

As in the UK, this week sees a wave of important US economic data and events. Among others, these include the minutes of the 23 September FOMC meeting, retail sales and CPI. The statement accompanying September’s policy decision noted that “economic activity has picked up following its severe downturn”. This compared with the phrase “activity is levelling out” in August’s assessment. But the policy ‘punch-line’ of “exceptionally low levels of the federal funds rate for an extended period” was included in both statements. So the FOMC minutes will shed further light on the degree of Fed confidence in the US recovery.

Meanwhile, following a robust outturn in August, retail sales could potentially deteriorate in September, reflecting the expiry of the so-called ‘cash-for-clunkers’ scheme. However, such an outturn is not clear-cut. Consumer confidence in September on the University of Michigan measure improved to its highest level since January 2008. Preliminary October figures for the Michigan survey are published on Friday, with our forecast at 73.5. CPI data are published on Thursday where we look for a reading of -1.4% in the year to September, versus -1.5% previously. On the “core” measure, we see an outturn of 1.4%, reflecting continuing spare capacity in the US.

Compared with the US and UK, the euro-zone economic data calendar is limited this week, with October’s German ZEW survey the main highlight. This survey – which gauges sentiment among financial market participants - has seen almost uninterrupted improvement, not just since the upswing in stocks beginning in March, but since the government re-capitalisation of banks announced in the wake of the Lehman Brothers’ collapse.

Going forward, the short-term outlook for ZEW economic sentiment hinges crucially on the ebb and flow of stock markets as the global recovery story unfolds. Our ZEW forecast stands at 58.5. Finally, Wednesday sees the release of euro area industrial production data for August, where a significant month-on-month rebound seems possible following recently-released data from Germany (+1.7% m/m), France (+1.8%) and in particular, Italy (+7.0%).

Mark Miller, Global Economist

For more information: Emile Abu-Shakra Manager, Media Relations Lloyds TSB Group Media Relations Tel 020 7356 1878 http://www.lloydstsbcorporatemarkets.com/

Lloyds TSB Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in