Although data continues to point towards the familiar theme of a global slowdown


MAJOR HEADLINES – PREVIOUS SESSION

  • Canada Housing Starts out at 134.6k vs. 145.0k expected and 153.5k prior

  • UK Feb. RICS House Price Balance out at -78.3 vs. -74.5 expected and revised -76.6 prior

  • AU NAB Feb. Business Confidence out at -22 vs. -32 prior

  • AU NAB Feb. Business Conditions out at -20 vs. -11 prior

  • AU ANZ Feb. Job Advertisements out at -10.4% m/m vs. -6.3% m/m prior

  • UK BRC Feb. Like-for-like Retail Sales at -1.8% y/y vs. +1.1% prior

  • UK BRC Feb. Total Retail Sales out at +0.1% y/y vs. +1.3% y/y expected and +3.2% y/y prior

  • JP Jan. Leading Index out at 77.1 vs. 77.4 expected and revised 79.4 prior

  • JP Jan. Coincident Index out at 89.6 vs. 89.8 expected and revised 92.2 prior

  • JP Japan Feb. Machine Tool Orders out at -83.9% Vs. -84.1% prior

  • CN China Feb. PPI out at -4.5% y/y vs. -4.5% expected and -3.3% prior

  • CN China Feb. CPI out at -1.6% y/y vs. -1.0% expected and +1.0% y/y prior


THEMES TO WATCH – UPCOMING SESSION

  • EU German Final Feb CPI (0700)

  • EU German Trade Data (0700)

  • UK Industrial/Manufacturing Production (0930)

  • EU Euro-zone Jan PPI (1000)

  • EU ECB’s Weber speaks (1000)

  • US Fed’s Bernanke speaks (1230)

  • US Wholesale Inventories (1400)

  • Norway CPI (1700)

  • EU ECB’s Mersch speaks (1705)

  • US ABC Consumer Confidence (2100)

Market Comment:

The bad news continues to pile up for the UK economy and GBP. Today’s release of the RICS House Price Balance showed a further deterioration in February to -78.3, with losses accelerating from January, though at least managing to stay above last September’s record low of -84.5. Average sales completed sank to 9.5 for the 3 months to February from 9.8 in January’s survey and are languishing at 30 year lows. Surveyors also continue to expect prices to slide further over the next 3 months but did note that new-buyer inquiries were rising at their fastest pace since August 2006. A small comfort if you needed it.

There was also no good news on the retail sales front, with February’s data indicating that the rebound seen in January had been a one-off and more a result of heavy discounting during the January sales.
Like-for-like sales were down 1.8% y/y compared to January’s 1.1% rise, but commentaries remind us that the UK was hit by heavy snow falls in the early part of February, which brought most of the country to a virtual standstill. This had an obvious dampening effect on sales, though larder-stocking helped food sales.

The data releases down in Australia were not much better. Australian business conditions were the toughest since the recession in the early 1990s, according to the NAB Business Conditions Index. The index fell a further 9 points to -20 in February and stood at its lowest level since 1992. Sales and profits also shrank and the employment index slumped 10 points to -27. Confirming the deteriorating employment situation was the separate ANZ Job Advertisements survey which showed a 10.4% m/m decline in February. This does not bode well for the release of Australia unemployment data on Thursday, with polls suggesting a median 20k in job losses and a rise in the unemployment rate to 5.0% from 4.8%.

European officials continue their stubborn streak when it comes to kick-starting the economy. In response to recent overtures from the US to radically expand government action to boost ailing economies, finance ministers from the Euro-zone said they preferred to wait and see the impact and effect of stimulus packages that had already been passed before considering further actions. They expressed concern that building up colossal debt mountains would threaten the stability of the Euro-zone itself. EU’s Juncker, who chaired the meeting, added that the EU was in an “ extremely deep recession”. Meanwhile, ECB’s Trichet commented that there were “a number of elements suggesting the global economy is approaching a moment of ‘pickup’” Really? His colleague on the ECB board, Juergen Stark commented that the ECB still had room to cut rates, but cautioned against slashing rates too low. He thought the ECB’s official rate at 1.5% was “very low”.