Today, the eco calendar is as good as empty, with US markets closed in observance of Veteran’s Day. In the evening, euro area Finance Ministers meet in Brussels. On the supply front, Germany will hold a Bubill auction. Looking further out this week, markets will react to a number of high profile economic releases from the US that will tell us whether the recent somewhat more upbeat data herald indeed an improvement in the business cycle. Friday’s consumer confidence at least suggests that households are more optimistic.
On Wednesday, we know more when the retail sales are published. Given strong sales in past weeks, even subdued further progress would be good news. However, more eco data concern the supply side of the economy. Here, the mood was still pessimistic until recently and little change is expected, as the election uncertainty and the uncertainty about the resolution of the fiscal cliff keep firms from investing and spending. NFIB small business sentiment (tomorrow), NY and Philly Fed surveys (Thursday) are here important. In EMU, attention goes to the Q3 GDP for the euro area (Thursday) and the national GDP figures (Greece and Portugal on Wednesday, Germany, France and Italy on Thursday).
A second straight contraction (expected) would cause a lot of negative headlines about recession. Regarding central banks, the FOMC Minutes of the November meeting will be released on Wednesday. That meeting, just before the Us elections, brought no new decisions, nor key changes in the assessment. Markets will look for hints on the communication strategy, which is currently under reform. More specifically, whether quantitative thresholds for QE and rate decisions will be withhold.
Any progress on this front might affect market thinking about policy going forward. Speeches of Fed chairman Bernanke on housing and Vice chairwoman Yellen on communication are worth looking at. In EMU, the Greek Odyssee continues. Following approvals in the Greek parliament of the austerity package and the 2013 budget, attention turns to the euro group that meets today. No change is expected, as sources, including the German FinMin said the dossier is not yet ripe for decision. Another meeting is now planned for next Monday. Statements of politicians and ECB on numerous debt crisis related items are potential market movers. In the US, budgetary negotiations between the president and the Congress start in earnest on Friday, but ahead of it a lot of political statements and positioning will be in the air.