Data Watch - March 18th

US

Fed day today - we find out at 2:15 whether or not Ben and company are heartened enough by the Bank of England's early success in bringing down gilt yields with its QE program to announce plans of its own to start buying Treasuries; lots of idle speculation out there about how much might be already priced into the market; but with US10s bouncing off a ceiling yield of 3% for the last five weeks, after getting nearly as low as 2% at last year-end after the FOMC announcement on Dec. 16 (that it was considering expanding its credit easing campaign into the realm of quantitative easing by perhaps buying longer-term Treasuries), it seems clear there's scope for a rally if today's statement does explicitly mention QE. On the other hand, there's surely also room for disappointment in the market if the Fed sheds no new light on its intentions --- particularly given that yields have remained pretty stable during this latest bear market stock rally.

US CPI came out a little less bond-friendly than expected, but still rather muted; CPI ex-food and energy was up 0.2 MoM and 1.8% YoY; headline CPI up 0.4 MoM and 0.2% YoY


CANADA

Canadian wholesale sales were worse than expected, at -4.2% MoM vs. expectations of -2.7%; inauspiciously, the inventory-to-sales ratio climbed further. This continues a string of downside surprises, including housing starts, new house prices, employment, capacity utilization. CPI is released tomorrow.

Perhaps not surprisingly, Marc Carney admitted a couple of days ago while speaking to reporters at a meeting of G20 finance ministers that the Bank's forecast of 3.8% growth for 2010 was too optimistic; though that number still stands as its official forecast until the next MPR in April, he said the the Bank was "in broad agreement" with the IMF's pessimism about a 2010 recovery, and that the downside risks that the Bank had identified in January were now indeed materializing. For his part, Carney's predecessor David Dodge said yesterday that "I think anybody would be dreaming in Technicolor to think that you're going to get through this by the third quarter of this year.” In an article in the Globe and Mail, he said that Canada and the world are facing a long and deep recession that will fundamentally alter the nature of capitalism.


INTERNATIONAL

Yesterday, Japan machine tool orders were -84% YoY; today Japan's business cycle leading index fell to a new low since 1986, at 77.2

Italian industrial production for January was better-than-expected for MoM but with revisions to December, was about as expected YoY, at -16.7%, but -22% on a not-seasonally-adjusted basis

UK jobless claims surprised significantly to the downside