EU Economic Sentiment, DE GfK, US Home Sales

Wednesday is a busy day for economic news, including GDP releases for the UK and France. The day ahead will also update several sentiment measures for Europe, which offer a degree of forward-looking guidance for deciding if the recession is easing or deepening. Two sentiment reports—one for Germany, another for Europe—may provide some clues. Meanwhile, a leading indicator for US home sales arrives later in the day.

Germany GfK Consumer Climate Indicator (07:00 GMT) The mood in Germany has slumped a bit recently, and today's read on sentiment from GfK may fall in line with recent data from other surveys. This report is released early and so it may set the tone for the day ahead, for good or ill.

A month ago, the trend looked promising, according to this index, which advanced in February and March. "The consumer climate has started 2013 well," GfK advised last month (pdf). "Despite the difficult international economic situation, German consumers are optimistic about the development of their domestic economy."

The economic news since this index was released a month ago has been mixed for Europe's leading economy. The question is whether the rough patch in the economic data is infecting consumer sentiment to any degree. Today's update will provide a clue on what to expect for the German economy in the spring.

EU Economic Sentiment (10:00 GMT) Shocking as it may seem, the mood in Europe has been improving in recent months, or so the European Commission's Economic Sentiment index suggests. It will be interesting to see if the recent uptrend holds in today's update for March. This broad measure of sentiment, a composite of business and consumer readings, seems to fly in the face of recent news that suggests that the recession may be deepening. For example, last week's purchasing managers index release for March suggests that the slump is getting worse for the Eurozone overall.

Will today's sentiment report buck the trend? Recent economic data suggests not, although a small decline in today's update would at least hold out some hope for thinking that contraction may ease up a bit in the coming months.

US Pending Home Sales Index (14:00 GMT) Existing home sales rose again in February, but sales of new homes pulled back last month after a strong gain in January. Is the mixed news on February sales a pause that refreshes or a sign that the housing recovery is headed for turbulence in the spring and summer? Today's update from the National Association of Realtors (NAHB) will offer some context for looking ahead.

NAHB's Pending Home Sales Index is considered a forward-looking guide for the housing sector. It's clear that the housing market is rebounding. From higher sales to increasing construction activity, the trend is clearly up these days and more of the same is probably on tap for the near-term future. But revivals don't forge ahead in a straight line. Analysts think that a modest detour on the road to recovery is coming, or so the consensus forecast for this index implies. The market is looking for a decline of around 0.7 percent in today's monthly number. In other words, economists see a retreat in the number of signed (pending) contracts for new home sales that are not yet final. A decrease would hardly signal the end of the housing recovery, but a bigger-than-expected drop would raise questions about the market's momentum for the spring.