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By HaleStewart January 18, 2015 8:25 am
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International Economic Preview For the Week of January 19-23: Big Week For Central Banks, Edition

     The following economic releases will have a disproportionate impact on the markets next week:

Monday

Chinese GDP: The new Chinese regime has stated they will accept lower GDP growth while also trying to rebalance their economy from one centered on exports and manufacturing to one more oriented towards domestic consumption.  This shift is also partially responsible for the sell-off in the commodities market we’ve seen over the last 6 months.  There is nothing to indicate we’ll see a downside surprise.  However, that’s always a possibility with economic releases.

Tuesday

BOJ Interest Rate Decision: this, combined with their Wednesday press conference, will provide insight into how the BOJ is handling the slowdown in inflation growth and GDP contraction the country is in the middle of.  Also, keep your eyes out for any potential changes in policy or new initiatives.

Wednesday

UK Meeting Minutes and Unemployment: with the BOE, there are several questions to answer:  1.) how has the drop in oil prices changed their inflation calculation (if at all); 2.) are they still concerned about housing prices, and 3.) are they moving the date up or back when they intend to raise rates?  As for unemployment, the UK rate ticked down from 7.2% at the beginning of 2014 to its current level of 6%.  The obvious question is, “has this trend continued?”

Canada interest rate decision and monetary policy report: the drop in oil prices will have a disproportionately negative impact on the Canadian economy.  As a result, there is a growing consensus that the Bank of Canada will lower rates soon. 

Thursday

EU Policy Announcement:  this is the ground zero economic event of the week.  Will they do QE (most likely)?  How will they do it?  How will Germany react?  The official announcement from the EU is simply a sentence or two.  The real policy announcement occurs in the afternoon press conference.

Chinese Manufacturing: this number has been fluctuating around the 50 level for the better part of the last year, which is partially responsible for the sell-off in industrial metals.  Pay particular attention to the report’s internals.

Friday

Markit EU numbers: these will be especially important due to their proximity to the EU interest rate decision.

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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