- Monday August 2nd, 2010 – US ISM Manufacturing Index (1400 GMT)
ISM Manufacturing assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment and deliveries. Though manufacturing accounts for a relatively small portion of GDP, fluctuations in manufacturing tend to bear the most responsibility for changes in GDP. Consequently, developments in manufacturing often front run trends in the overall economy, making the ISM manufacturing figure a leading indicator of economic turnarounds. Although the ISM has been consistently above 50, which represents and expansion, the last two releases have been softer than expected. This is the first release for the month of July, and it is important for the equity markets to see a as expected number.
- Tuesday August 3rd, 2010 – Reserve Bank of Australia Interest Rate Decsion
The RBA has raised interest rates 5 times in the past 12 months, moving the rate up to 4.5%. Expectations are for the RBA to remain on hold at 4.5%. Recent inflation expectation reports have been benign (.6% in the second quarter compared to the 1% which was expected), but employment growth has been more robust than expected. Although interest rates might remain stable, the market will be careful attention to the statement from the board of Governors that comes along with the decision to determine if the RBA plans to raise rates at their next meeting.
- Tuesday August 3rd, 2010 – US Personal Consumption Expenditures (1230 GMT)
The PCE is a comprehensive measure of how much consumers spend each month, counting expenditures on durable goods, consumer products, and services. Personal Consumption is a comprehensive measure of GDP; consequently, the figure is watched as an indicator for economic trends. Spending also has direct affect on inflationary pressures. Expectations are for a .2% increase in Core PCE, which excludes the volatile components of spending. The consumer drives GDP in the US, making up nearly 66% of GDP, and this number will move the markets.
- Wednesday August 4th, 2010 – EMU Retail Sales (900 GMT)
Retail Sales in the EMU is the total value of goods and services sold each month at retail outlets. The report acts as a gauge of consumption and consumer confidence. An increasing number of sales signal consumer confidence and economic growth, which would fuel the Euro-zone economy. However, higher consumption also leads to inflationary pressures, which results in economic instability. The headline is the monthly percentage change in retail sales. Retail trade is where goods are purchased primarily to be resold to the consumer or end-user. The Retail Trade figure tracks the value of turnover in retail trade by calculating the sum of invoice totals in the reporting month. Europe has recently seen better than expected manufacturing, but has not seen a follow through on the consumer side, this will be an important gauge of economic growth.
- Thursday August 5th, 2010 – Bank of England Interest Rate Decision (1100 GMT)
The announcement of whether the Bank of England has change the key interest rate is an important announcement. The BoE meets monthly to decide on monetary policy. After each meeting, policy decisions are announced. The main task of the Bank of England’s Monetary Policy Committee is to set the monetary stance by fixing the overnight borrowing rate, which is incremental in determining the short-term rates. Through this mechanism, the BoE attempts to affect price levels in order to keep inflation within the target range while maintaining stable economic growth and employment. The BOE Rate decision has great influence on financial markets. The BOE is expected to keep rates unchanged at .50%, but the statement on bond purchases and quantitative easing will move the markets.
- Thursday August 5th, 2010 – European Central Bank Interest Rate Decision (1145 GMT)
The European Central Bank’s decision to modify its main borrowing interest rates. Controlling interest rates is the key mechanism of monetary policy, and the ECB influences interest rates by first changing the “overnight rate” through the purchase or sale of government bonds. Lowering rates can spur economic growth but may incite inflationary pressures. On the other hand, increasing rates slows inflation but can stymie growth. The European Central Bank makes a concerted effort to be transparent in its policy. Frequent speeches by Bank Governers make policy goals clear and the Bank adheres to a stated inflation target of 2 percent, changing rates accordingly to meet that goal. Because of this, rate decisions are generally well anticipated, but very important nonetheless. The ECB’s rate decision has an enormous influence on financial markets. Expectations are for the ECB to leave rates unchanged at 1%.
- Friday August 6th, 2010 – US Employment Number (1230 GMT)
One of the most widely anticipated reports on the US economic calendar, the Employment Situation is a timely report that gives a picture of job creation, loss, wages and working hours in the United States. Data in the report relies on the Household Survey and the Establishment (or Payroll) Survey. While the Household Survey is based on the interviews to US households, the Establishment Survey queries business establishments, making it the preferred source of data. The Employment Situation’s has many significant figures such as the change in Non Farm Payrolls, Unemployment, Manufacturing Payrolls, and Average Hourly Earnings. Employment is the key figure in the turnaround of the US economy. Expectations are for a slight decline in non-farm payrolls and a stable unemployment rate. This will be a market mover.