This page is updated daily with information that can help expand your knowledge of CFDs and add to your trading armoury.
Here we cover details of some of the more important economic reports of the day, including when they are released (times shown are the local time for the relevant economic area), what they mean and how they may affect the financial markets.
Visit us daily for the latest posting from the TradeSense databank (the complete databank resides in the client area of our website and contains a full full list of reports for every economic indicator that we cover).
Monday 15 & Tuesday 16 March 2009
UK- Rightmove House Price Index (March)
Released by: Rightmove (monthly)
Time: 00.01 (UK)
What is it?
A guide to the cost of homes in the UK, provided by taking a sample of residential property prices.
Why is it important?
It can be used to gauge the strength of the housing market; rising house prices tends to increase consumer sentiment, which can lead to higher consumer spending and, therefore, may trigger inflationary pressures.
Japan- Condominium Sales (YoY)(Feb)
Released by: The Real Estate Economic Institute of Japan
Time: 13.00 (Tokyo)
What is it?
It is the annual change in the value of condominium sold in Tokyo each month.
Why is it important?
It is an overall measure of the housing market and is sometimes used to gauge consumer spending. The figure responds quickly to change in the business cycle by indicating the onset of a recession with a slow down, and an increase in the figure showing the beginning of an economic boom. A high reading is seen as positive for the JPY, while a low reading is seen as negative.
Japan - Consumer Confidence (Feb)
Released by: The Cabinet Office (Japan) (monthly)
Time: 14.00 (Tokyo)
What is it?
It is a measure of individual sentiment concerning the Japanese economy. Consumers are surveyed about their spending habits and their expectations regarding inflation.
Why is it important?
High levels of confidence amongst consumers paves the way for increased spending. The Japanese economy tends to thrive on its exports but increased consumer expenditure is an important driver of inflation and economic growth. A figure above 50 indicates positive consumer sentiment while a number below 50 is negative.
Eurozone - Employment Change (4Q)
Released by: Eurostat
Time: 11.00 (CET)
What is it?
This report estimates the change in numbers of people employed in the eurozone.
Why is it important?
If there is a rise in employment, it means that, generally speaking, overall there should be more wages being earned, which can fuel consumer spending. Generally this is good for the well-being of the economy, although higher spending can also spur inflation, which may be force the RBA to make an attempt to counteract via rate increases.
U.S. - New York Empire State Manufacturing Index (March)
Released by: The Federal Reserve Bank of New York (monthly)
Time: 07.30 (EST)
What is it?
It is a survey of New York State manufacturing companies with 100 or more employees or annual sales of at least $5 million (about 250 companies). This is a relatively new survey which is similar to the Philadelphia Fed's business outlook survey.
The results of the survey are published on the fifteenth of the month (or on the next business day).
Why is it important?
The questionnaire invites contributors to document the direction of change of a number of business indicators, such as general business activity, new orders, inventories and shipments. The options are purely directional (ie increase, decrease or no change) with no indication of magnitude being requested.
The Empire State manufacturing survey is a comprehensive snapshot of the NY State manufacturing sector, providing evidence of how busy the sector currently is and where the sector is likely to be heading.
Manufacturing is an important component of the US economy and this survey can therefore exert a strong effect on the stock and bond markets.
What can we expect?
Of the analysts surveyed by Bloomberg, the average consensus for the month stood at 22, lower than last month's previous estimate of 24.91.
U.S. - Net long-term TIC Flows and Total Net TIC Flows (Jan)
Released by: US Department of Treasury
Time: 08.00 (EST)
What is it?
Treasury International Capital (TIC) tracks the flow of financial instruments into and out of the US. These include Treasury securities, agency securities, corporate bonds and corporate equities.
Why is it important?
Although TIC data has been issued for the past 30 years, it is only recently, after a rise in foreign market participation, that it became of interest to international financial markets.
TIC measures foreign demand for US debt and assets, although it may methodologically be limited.
The report may have more relevance for the bond and foreign exchange markets which are more susceptible to the data than the equity market.
U.S. - Industrial Production (Feb)
Released by: The Board of Governors of the Federal Reserve (monthly)
Time: 08.15 (EST)
What is it?
Industrial production is a monthly report that measures the volume of output of factories, mines and utilities in the US.
As industrial production quantifies output volume as opposed to dollar value, the data is not distorted by inflation and is therefore deemed to be a 'purer' gauge of the industrial sector in the US.
Why is it important?
Industrial production makes up no more than 20% of the US economy, yet is responsible for most of the volatility and is judged to be very susceptible to variations in interest rates and consumer demand. Consequently, spotting trends in this figure can offer clues as to the futures trends of GDP.
High or rising industrial production suggests economic expansion, which should be beneficial for the stock market. If the figure rises too quickly, suggesting aggressive or uncontrolled growth in the economy, it can cause inflationary pressures, which is bad for the bond market.
What can we expect?
Figures from a Bloomberg survey of analysts predict a figure of 0.0% for this month in comparison with a previous figure of +0.9%.
U.S. - Capacity Utilisation (Feb)
Released by: The Federal Reserve Board (monthly)
Time: 08.15 (EST)
What is it?
Capacity utilisation is a measure of the utilisation of factories and machinery by US manufacturing companies and is an overall indicator of economic growth and demand.
Why is it important?
High capacity utilisation indicates a vibrant economy and falling figures represent low demand. Inflation may be a result of rising capacity utilisation as limited resources are higher in demand.
What can we expect?
A Bloomberg survey of analysts showed that average estimates were 72.6%, which is the smae as the figure reported last month.
U.S.- NAHB Housing Market Index (March)
Released by: National Association of Home Builders (monthly report)
Time: 12.00 (EST)
What is it?
It is an index based on a sample of home builders that represents home sales and future building expectations.
Why is it important?
Although the figure is not as comprehensive as other reports on housing, the figure gives an indication of future home sales in the US. Historically, the housing market is strongly correlated to the state of the overall economy, often turning in direction at similar points in the business cycle.
The housing market suffers when disposable income is low or consumer confidence is weak. Drops in housing demand, therefore, typically tally up with slowdowns in the economy at large, whilst rebounds in the housing market may presage economic recovery.
The report headline is expressed in percentage change from the previous month.
What can we expect?
A Bloomberg survey of analysts predicted 17 which is the same as the previous month's figure.
Tuesday 16 March 2009
Australia – RBA Meeting’s Minutes
Released by: Reserve Bank of Australia
Time: 11.30 (AEST)
What is it?
Detailed notes which are published two weeks after the last rate decision meeting.
Why is it important?
The minutes give a useful insight into the decision-making process of the RBA and their thoughts about the Australian economy.
The notes can give indications of future rate decisions, showing how members voted in the last meeting, and highlighting the committee's key concerns. If the Bank is concerned about inflation ('hawkish'), it suggests a future rate increase is likely. If the Bank seems positive that inflation is under control ('dovish'), then rate increases are less likely (and increases the chances of a rate cut).
Japan - BoJ Monetary Policy Meeting Minutes
Released by: The Bank of Japan (monthly meeting)
Time: 13.00 (Tokyo)
What is it?
It is a summary of the minutes of the Bank of Japan’s monthly monetary policy meeting.
Why is it important?
During the meeting, economic developments inside and outside the country are reviewed as well as key points concerning monetary policy. The study gives investors an insight to future interest changes which markets will tend to focus on. If the bank is pessimistic about inflationary outlook, there is greater tendency towards a rate increase. An increase is less likely if the bank is content that inflation is stable.
Japan - Machine Tool Orders (Feb)
Released by: Japan Machine Tool Builders Association (JMTBA) (monthly report)
Time: 15.00 (Tokyo)
What is it?
This release tracks the total value of machine tool orders placed at leading manufacturers in Japan.
Why is it important?
The survey is held to provide an early view of trends in corporate capital spending. Favourable figures are often seen as a sign of a healthy business outlook.
Higher capital spending is also positive for the Japanese labour market, as companies will generally require new employees to run and maintain new machinery.
Eurozone - New Car Registrations (Feb)
Released by: Eurostat (monthly report)
Time: 08.00 (CET)
What is it?
The number of cars registered for the first time across the whole the euro area for the given month.
The headline figures released are the monthly and annual percentage changes in the new car registration index.
Why is it important?
Can provide a helpful pointer towards consumer sentiment and spending. Motor vehicles are expensive items and if sales are high, it suggests optimism in consumers. If the auto sales are strong, it also bodes well for other significant sectors, such as the manufacturing industry, as well as for overall GDP.
Eurozone - CPI (Feb)
Released by: Eurostat/European Central Bank (monthly report)
Time: 11.00 (CET)
What is it?
The Consumer Price Index (CPI) measures the average price of a fixed basket of goods and services as might be purchased by consumers and provides a guide to the rate of inflation in the euro area.
A Core figure is also released that excludes food and energy prices. Food and energy are volatile components in the CPI basket and can cause distortions that only represent short-term factors.
The headline figures for the Eurozone CPI are a monthly and annualized percentage change.
Why is it important?
A rising CPI indicates inflation and a high CPI suggest significant inflationary pressures in EMU economies. The European Central Bank aims to keep inflation at 2% or lower, and a high CPI figure puts pressure on the ECB to raise interest rates. Generally speaking, higher interest rates should be good for the euro, but negative for bond prices and stock prices.
Eurozone – ZEW Survey of Economic Sentiment (March)
Released by: Zentrum für Europäische Wirtschaftsforschung (monthly report)
Time: 11.00 (CET)
What is it?
A survey of financial experts across Europe canvassing their opinion (positive, negative or neutral) regarding the economic prospects for the euro area as a whole.
The results of the survey are summarised as the number of positive responses minus the number of negative responses.
Why is it important?
Gives an idea of expectations for the economy of the eurozone. The higher the number, the better the business climate.
U.S.- Import Price Index (Feb)
Released by: Bureau of Economic Analysis, US Department of Commerce (monthly report)
Time: 07.30 (EST)
What is it?
An index that measures the change in prices being paid for goods imported to the US.
The headline figure is the percentage change (figures for both month-on-month and year-on-year are given).
Why is it important?
As Trade Balance is total imports minus total exports, it follows that a gauge of how the prices of imports is changing can give some big insights into Trade Balance. It shows whether changes in the value of imports is caused by changes in price or changes in demand. The US is a net-importer; significant changes in price of foreign goods being imported can therefore have a big influence on the economy and on inflation. The bond market is particularly vulnerable to the risk of inflating import prices, as it decays the value of the principal (the original investment) which is repaid upon a bond's maturity. It also reduces the regular interest rate payments associated with the bond.
What are market expectations?
A Bloomberg survey shows a median expected change of -0.1% (month on month) compared with the previous released figure of -1.4%.
U.S. - Housing Starts (Feb)
Released by: US Census Bureau (monthly)
Time: 07.30 (EST)
What is it?
Housing Starts is a report that measures the change in volume of new houses built in the US each month.
Why is it important?
An increase in Housing Starts implies an increase in commitment to build new properties by developers and construction companies. As such a commitment will inevitably involve large outlays, it can be seen to indicate an increase in investment and business optimism.
The report also sheds light on consumer activity: buying a new home is always likely to involve high consumer spending in the form of decorating costs, household appliances, etc.
As a consequence of its relationship with consumer and corporate sentiment, property investment typically guides economic development.
A fall in Housing Starts is often a forewarning of a slowdown in the economy, whereas a rebounding number of Housing Starts can often point toward economy recovery.
The Housing Starts report is one of the earliest indicators for the housing market: only Building Permits is more timely.
What can we expect?
A Bloomberg survey of analysts predicts a figure of 570,000, compared with the previous month's figure of 591,000. The month on month change predicted was -3.6% from +2.8% previously.
U.S. - Building Permits (Feb)
Released by: US Census Bureau (monthly)
Time: 07.30 (EST)
What is it?
This reports the number of building projects for which authorisation to start construction has been obtained.
The headline figure is the total number of permits that have been issued.
Why is it important?
This gives an indication of future developments of the housing market: obtaining a permit for building is the first step in the construction process.
What can we expect?
610,000 was the median forecast of the economists polled by Bloomberg; this compares with the 621,000 reported last month. The month on month percentage change was predicted to be -1.9% from -4.9% previously.
U.S. - FOMC Policy Announcement
Released by: The Federal Reserve Open Committee (FOMC)
Time: 13.15 (EST)
What is it?
In the US, the Federal Reserve has responsibility for setting monetary policy. The Federal Reserve Open Committee (FOMC) holds eight regularly scheduled meetings each year. These occur approximately every six weeks and are immediately followed by an announcement of any changes to monetary policy.
Why is it important?
These meetings are considered to be the single most influential event for the financial markets.
Changes to monetary policy most often relate to changes in the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
The federal funds rate acts as a yardstick for all US rates and adjustments by the Fed to the rate produce a chain of events that influence other short-term interest rates, FX rates, long-term interest rates and eventually a host of economic factors, such as employment, output and prices of goods and services.
Changes in the federal funds rate, and the associated knock-on effect to other rates and to bonds, can have a strong effect on investment trends: a rise in rates, for example, which leads to higher yielding bonds and better returns for other fixed-income products, can make stocks less attractive.
Moreover, higher rates will slow consumers’ high-level purchases (most significantly houses and cars) and will have a major bearing on companies that have high levels of debt or businesses that have to pay financing on high inventory levels.
Ultimately, lower interest rates are bullish for the economy and financial markets, whereas higher interest rates are bearish.
What can we expect?
Of the economists surveyed by Bloomberg, the median consensus was 0.25% which remains unchanged.
U.S. - ABC Consumer Confidence (May 11)
Released by: ABC News (weekly)
Time: 16.00 (EST)
What is it?
It is a measure of consumer sentiment towards the economy. Consumers are surveyed about their attitude to spending and financial situation.
Why is it important?
The figure tends to go hand-in-hand with wage or salary decreases and is usually an indication of a fall in spending.
Although the index is comparatively new and may tend to take a backseat when compared to more established indices, it does give a timely suggestion of what is to come.
The figure offers an insight into the general health of the economy, which investors, retailers and traders tend to keep an eye on.