The US Federal Reserve has a one day meeting this week at which interest rates will be the only topic of real interest.
But investors and others should keep an eye out for the Fed’s comments in its post meeting statement on the end of its huge support programs for the US Government, especially its $US1.2 trillion worth of purchases of mortgage backed securities which has kept the stricken US housing sector alive for more than 18 months.
The Fed has said it will end these purchases at the end of this month.
No one what will happen to US home lending and interest rates from April onwards, it could crunch or carry on like it has been.
The meeting will also be watched closely to see whether it softens its assessment that economic conditions will likely justify keeping rates low for an “extended period”.
The Fed is expected to hold benchmark rates near zero and reiterate its pledge to keep them low for an "extended period."
The AMP’s Dr Shane Oliver said Friday that he doesn’t think it will make a change this time around, but a change in the wording to give it more flexibility is likely to come once employment starts to grow again.
In fact some analysts reckon there could be a very big jump in March employment; perhaps well over 100,000, perhaps even 200,000.
They base this on the continually improving pace of activity, retail sales, production and the fact that the snows of February disguised what was happening in the US labour market.
This upbeat view of the US economy will be further tested this week with figures on industrial production, housing starts, a survey of home builders, consumer prices and a couple of manufacturing surveys all due for release.
Key economic reports on tap includes regional manufacturing for March, leading economic indicators for February, housing starts for February, the Producer Price Index and the Consumer Price Index, both for February, and weekly initial jobless claims.
On Tuesday, housing starts for February are expected to fall to an annual rate of 570,000 units from 591,000 in January.
Wednesday’s Producer Price Index for February is expected to see a month-over-month dip of 0.2%, compared with January’s surprise rise of 1.4%.
On Thursday, the Consumer Price Index for February is forecast to gain 0.1%, down from 0.2% in January.
Core CPI, which omits volatile food and energy prices, is forecast to rise 1.4% in February, following a 1.6% rise in January.
Investors should also watch Washington, where Senate Banking Committee Chairman Christopher Dodd is expected to unveil his own proposed legislation on overhauling the country’s financial regulation.
Bipartisan Senate talks over reform collapsed last week. Not much hope is now given for US financial reforms this side of 2011.
In Asia, the Bank of Japan’s monetary policy meeting will be watched closely given recent signs that it might be preparing to step up the pace of quantitative easing.
In Europe, earnings are expected from luxury products group, Bulgari, the big women’s wear retailer, Inditex and Italian banking group, Unicredit.
There’s a sentiment survey from Germany and in London, the Bank of England minutes.
We might also get some sort of agreement to support Greece from a meeting of eurozone finance ministers today and tomorrow.
In Australia, interest rates will remain a focus with a speech (today) by the RBA’s Malcolm Edey and the release tomorrow of the minutes from the last rate setting meeting.
The minutes will help us find out if the board though the decision was as ‘finely balanced’ as in previous meetings, especially the February meeting where there was no rate move.
David Jones reports its interim earnings on Thursday.
After the reception given to Myer’s figures and outlook, the contrast with the normally more upbeat David Jones management will be fascinating.
Another retail float from late 2009, Kathmandu Holdings, releases its first interim figures on Thursday as well. Like Myer, it was sold off by private equity interests.
Australian Bureau of Statistics releases include lending finance figures today and December, December quarter and 2009 home starts on Wednesday.
There’s a number of annual meetings, Including Stirling Resources Ltd, CFS Retail Property Trust, Commonwealth Property Office, Queensland Mining Corp, Cloncurry Metals Ltd, Bounty Mining, Meridian Minerals, Modena Resources, Range Resources Ltd general meeting.
