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By HaleStewart February 1, 2015 8:38 am
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International Economic Preview For the Week of February 2-6

            The following economic releases will have a disproportionate impact on the markets in the coming week.

Monday

EU Markit manufacturing numbers: for the last six months, the EU Markit numbers have been printing right above the 50 level – just barely positive.  There is no reason to think the numbers will move sharply in either direction in this release.

US ISM Manufacturing Numbers: ISM is the US equivalent of Markit.  While this number has been decreasing over the last few months, it has still been printing at solid levels above the 50 line the separates expansion and contraction.  Pay particular attention to the anecdotal quotes contained in the report.

Australia Interest Rate Decision: with rates currently at 2.5%, Australia has the highest rates in the developed world.  However, the central bank is trying to balance a potential housing bubble with a slight slowdown in activity.  Perhaps with Canada’s recent surprise cut, the RBA will have a bit more policy latitude to cut.

Tuesday

India Interest Rate Decision: the central bank of India surprised the markets with a 25 basis point cut at their latest meeting.  As the inflation rate has dropped from between 7%-8% over the last few months, it’s possible the bank may feel it has more latitude to lower rates further.

Australia AIG Services Index: this week, AIG releases its monthly survey of services, manufacturing and construction.  The last three reports had all indexes below the 50 level that separates expansion and contraction.  As with the US ISM numbers, pay particular attention to the inner-numbers of all these reports; the latest for all three contained concerning data.

Wednesday

EU Markit Composit: the composite reading has been printing between the 51-52 level for the last few months, but this is mostly due to the higher reading from the services index.

EU retail sales: the year over year numbers have actually been pretty fair over the last year.  While we’d like to see them stronger, this is one of the few data sets that is indicating at least a modicum of economic strength.

Thursday

UK Interest Rate Decision: we recently learned that the two members of the board who were voting for rate hikes have since decided to take a neutral position.  With low inflation and weak global demand, there is no reason to think the UK will do anything except stand pat.  However, pay attention to any language that that implies a hike sooner than anticipated.

Friday

US Employment Report: the last employment report was mixed; while the overall level of employment increases was good with another .1% drop in the unemployment rate, the wage information was disappointing.

Canada Unemployment: with the Bank of Canada cutting rates at their latest meeting and the massive drop in oil prices over the last six months, this number takes on a greater level of importance.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

 

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