The eco calendar remains enticing later on this week, both in the US and in EMU. In the US we retain, the NY Fed manufacturing survey and production data on Wednesday, the Philly Fed survey, housing starts & permits and initial claims on Thursday and Michigan consumer sentiment on Friday. These activity data will give us a good picture on activity in April. In EMU, attention will go to Q1 GDP (Tuesday) and to a lesser extent the ZEW survey on sentiment.
The US retail sales are expected to have fallen by 0.3% M/M, following an already steep 0.4% M/M drop in March. However, these back-to-back declines are driven by sales at gasoline stations and are largely due to a price affect. The situation looks already better when these sales are stripped out. Retail sales excluding sales and gasoline stations and car sales, should show a modest 0.2% M/M rebound following a 0.1% M/M dip in March.
Following a WSJ article of Fed watcher Hilsenrath, markets attention will be fully on Fed speakers this week. Hilsenrath didn’t suggest the Fed was near starting the tapering of its QE tapering, but he said that Fed officials had convened a QE strategy in which they planned to reduce the amounts of bond buying in careful way, by using eventually uneven steps and sometimes stop the tapering. In this way, it will try to manage market expectations. Fed Plosser, Rosengren, George, Raskin, Williams and Kocherlakota speak, most of them on Thursday/ Friday, while chairman Bernanke speaks on Friday. Last Thursday, hawk Plosser said he favours tapering QE, already from the June meeting onwards. That’s not really a surprise coming from the renowned hawk Plosser, but what are other Fed governors thinking. On Friday, chairman Bernanke said that the Fed is monitoring risk taking in markets, as low yields also carry risks.