The data calendar is sparse in the first three days of the March 7 week, but picks up on Thursday and Friday with a few closely watched economic indicators. Routine announcements from two central banks may signal some shifts in the outlook for official rates, although changes in policy will probably await the outcome of some of the unrest in the Middle East, and its consequent impacts on oil prices. Probably the most important piece of economic data in the coming week will be the retail sales report on Friday. Strong auto sales and rising petrol prices contributed to the gains, but there may also be higher sales at food stores, restaurants, and at department stores.
The data on international trade on Thursday should help set expectations for GDP in the first quarter 2011. The fourth quarter growth of 2.8% was below what was expected, but the composition of growth sets the stage for stronger activity as 2011 commenced. Imports of oil are going to be more expensive and will raise the overall import components, but exports should benefit from the stronger global economy and rising prices for US agricultural products, as well as demand for manufactured goods. The March IBD/TIPP Economic Optimism Index will be released on Tuesday, while the preliminary Reuters/University of Michigan Consumer Sentiment, the next report of which is set for Friday.
The report on consumer credit outstanding is due on Monday and should reflect the gains in motor vehicle sales, and the consequent increases in auto loans. Initial claims for unemployment insurance on Thursday could reinforce the more optimistic view of the labour market. Levels of new claims have been below the psychologically important 400,000 mark in three of the last four weeks. The next FOMC meeting on March 15 approaches, and the traditional press blackout period goes... Read more