CBI Survey, Case-Shiller HPI & New Home Sales

The CBI Distributive Trades Survey for Britain provides some clues on consumer spending in February, and two housing updates for the US — Case-Shiller Home Price Index and new home sales data — bring fresh guidance on the crucial issue of market demand for real estate.

UK CBI Distributive Trades Survey (11:00 GMT) Retail sales in Britain began this year on a weak note, falling a larger-than-expected 0.6 percent in January. Will February data bring some relief? Yes, according to the consultancy IHS, which expects to see "some improvement" in today's distributive trades survey for February from the Confederation of British Industry. The outlook for higher spending for this month reflects "consumers making up for some of the sales that were lost to January’s snow," IHS reasons.

The stakes are certainly high. Fears that Britain is slipping into a new recession are not easily dismissed after reading the January retail sales report. The CBI survey is considered a leading indicator of the hard data on consumer spending, which follows several weeks later after this report. For additional context, keep an eye on any headlines tied to today's scheduled speech in Tokyo by Bank of England chief Mervyn King (scheduled for 06:00 GMT). The market will undoubtedly read today's CBI report in the context of any macro commentary from King, who is set to talk some five hours before the survey is released.

US S&P Case-Shiller HPI (14:00 GMT) With the scheduled budget cuts in federal spending due for next month, the US economy needs all the help it can get to keep optimism bubbly. The tail wind from the real estate recovery has been a critical source of economic growth recently, and the recovery is too weak to survive without this positive momentum. With that in mind, today's December release of the Case-Shiller Home Price Index will tell us how last year ended, and what to expect for pricing trends in this year's first quarter. The consensus forecast sees a 0.8 percent gain for the 20-city index, which is in line with my econometric modeling.

The bad news is that there is minimal room for disappointment, thanks to rising anxiety about the potential fallout from the across-the-board spending cuts, which begin to kick in on March 1. An unexpected drop in home prices at this stage would be a dark sign. The good news is that the odds appear low for a negative number in today's release.

US New Home Sales (15:00 GMT) Sales of single-family homes are expected to rebound in January and reverse 2012's year-end month-over-month slump. The market will need to see nothing less to bolster the case of the optimists that the December retreat for this indicator was just payback for November's unusually strong gain. Analysts don't see any reason to disagree. The consensus projection assumes a modest increase of roughly three percent to 381,000 units on an annualised basis.

My models also anticipate a rise, but I'm not all that confident that we'll see much more than a marginal increase. That said, it would take an usually big downside surprise to convince the crowd that the progress of last year has run its course. That is unlikely, even if today's number is a bit wobbly. Indeed, the pace of construction for new one-family homes last month rose to a four-year high - a strong sign that demand remains healthy, which will probably be reflected in today's sales report.

“We ended 2012 on a solid note and we do have some momentum heading into this year,” says Gus Faucher, a senior economist at PNC Financial Services. “The fact that single-family starts are up is very encouraging. It is more important to the economy in terms of employment and growth.”

The pressing question, of course, is whether the Washington will unleash a new wave of austerity on the macro landscape, which could derail the otherwise encouraging trend for housing. Then again, today's new home sales data is a month old, which is to say that the current troubles brewing in Washington aren't likely to infect the number du jour. Next month and beyond, of course, are wide open for debate.