More speculation that China is prepared to provide more stimulus to the lusting markets have sent risk up into the green this morning - though it is on a shaky foundation for now - and we have a couple of economic reports to keep us entertained today, most notably consumer confidence from the world's largest economy. Furthermore, with this being the week of mammoth reports including ISM Manufacturing and not least US Employment (both Friday) we take a look at another regional report on manufacturing, one of the last before "Super Friday."
- March US Case-Shiller Home Price Index (13:00 GMT) to gain again? After a disappointing second half of 2011, which saw home prices return to their all too familiar declining ways, home prices finally reversed that trend (at least for a single month though we speculate it will last longer) in February with a gain of 0.15% m/m. Sales have clearly formed a bottom and are trending upwards again, but with supply still overpowering demand prices continue to display weakness. Having said that, as briefly touched on above, we do see higher house prices going forward - if only evolving slowly. Consensus agrees, with respect to the March report at least, and forecasts that prices will rise 0.2% (to -2.6% y/y from -3.5%).
- US May US Consumer Confidence (14:00) to gain on labour, gas prices: Last week we saw the University of Michigan's index of consumer confidence climb to its highest level in five years by recording 79.3 in the finalised May report (from 77.8 initially and 76.4 in April). Consensus expects a similar showing in today's report from the Conference Board with confidence seen inching higher to 69.5 from 69.2. Despite the weakness evident in recent labour market reports the fact remains that jobs are continuously added, thereby helping sentiment, and to this we can add that gas prices have come down some 6% on average since the peak two months ago.
- May US Dallas Fed Manufacturing Activity (14:30) to recover? Though not as widely followed as Thursday's Chicago PMI the Dallas Fed nevertheless provides us with more regional knowledge of the going-ons in the US Manufacturing sector. Indeed, the Dallas Fed's measure dipped below zero in April before some of the more high profile regional reports (such as Philadelphia) though consensus expects a return to mild growth in May with a 1.5 forecast (from -3.5). Overall our story about the US has not changed; we continue to expect a muddle-through year (again) with weaker growth this quarter before accelerating a bit into year-end. We see no impending recession though the recent (and likely also still to come) weak reports may see this theme return come summer, just like last year.
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