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Key U.S. Data Releases and Events16 May 08Next week, there will be light fare on the indicators front, with little to add to the picture of a struggling economy. The midweek release of the FOMC minutes will garner more attention than usual, in view of the Fed's recent controversial policy decisions. Indicators on the short-term performance of the economy deteriorated last week, as signals from retail sales, manufacturing activity, and consumer confidence were generally negative. In addition, oil prices bounced back up to record levels. In contrast, financial indicators continued to show signs of improvement as the TED (Treasury-eurodollar) spread moved down decisively for the second consecutive week, equity markets clawed higher, and housing activity saw an unexpected bounce in April. The IRS is blasting out rebate checks as fast as the check-printing machines will allow, but it is still too early to gauge the consumers' response. The continued deterioration of consumer confidence still threatens to mute the rebates' impact on spending. Next week, there will be light fare on the indicators front. Core producer prices are expected to have accelerated slightly in response to pipeline pressures from intermediate and crude goods, while existing home sales likely declined again. The minutes of the April 29–30 FOMC meeting will be released midweek, providing considerably more background on the Fed's recent controversial decisions on both the level of interest rates and other direct action to support liquidity and trading in distressed securities markets. KEY U.S. DATA RELEASES THIS WEEK Tuesday, May 20 – Producer Price Index (Apr.) Total Core What to Look For
Implications We expect producer prices rose a milder 0.4% in April, following a 1.1% surge in the previous month. A temporary stabilization in energy prices following their 2.9% March surge accounts for much of the moderation, although food prices once again put upward pressure on the headline rate. Excluding food and energy, we expect "core" producer prices to be up 0.3%, just above last month's 0.2%. There are underlying pressures on core finished producer prices from rapid rises in intermediate and crude goods, particularly fabricated metals, steel, and chemicals. Friday, May 23 – Existing Home Sales (Apr.) Global Insight: 4.80 Mil. What to Look For
Implications Existing home sales have hardly budged in seven months, but sales did fall in March, and the Pending Home Sales Index (PHSI) points to further drops in April and May. Based on the Fed's latest PHSI, and the latest Senior Loan Officer Opinion Survey (which showed that in April, 60% of respondents said that they had tightened lending standards on prime loans in the past three months), we are projecting a 2.6% decline in existing home sales during April. by Brian Bethune and Nigel Gault
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