A mostly positive U.S. employment report and the soothing impact of quantitative easing by the European Central Bank were not enough to help markets end the week on a completely positive note. U.S. equity and bond investors grew rattled over the fear that the good-news-is-bad rule was now in effect for U.S. dollar-denominated assets. A primary focus for allocators will be determining whether positive economic developments have now been fully priced into equity and bond markets and whether any macro risk factors stand likely to spoil the central bank party mood further. One critical test will be the Eurogroup meeting on Monday, when euro zone finance ministers will review proposals from Greece over another bailout tranche. Notes Derek Holt, a vice president in capital markets research at Scotiabank in Toronto, Standard & Poors will be reviewing its sovereign debt rating for Greece later in the week. Greece is not the only cause for pause, of course. Volatility in forex markets underscored concerns over heavy U.S. dollar borrowing in emerging markets. In the week ahead, investors are likely to continue to focus on what will ultimately drive returns for financial assets: short-term interest rates or underlying fundamentals.
Monday, March 9: The new week kicks off with the release of Chinese February trade data. Analysts expect Lunar New Year celebrations to distort numbers somewhat. In Japan, critical private lending data for February and trade balance figures for January takes a backseat to revised fourth-quarter GDP with expectations for better capital expenditures without a change in the headline growth rate. January trade data will be released in Germany as European markets focus on the Eurogroup meeting in Brussels. On a quiet day for economic releases in the U.S., regional Federal Reserve presidents Richard Fisher and Loretta Mester will be giving speeches on policy issues. Executive recruitment giant Korn/Ferry International will announce fiscal third-quarter earnings on Monday, providing insight into the job market at the high end of the U.S. and European spectrum.
Tuesday, March 10: Critical Chinese February consumer and producer price inflation data will be released by the National Bureau of Statistics on Tuesday, with consensus forecasts for a modest rebound in prices at the cash register while slack fuel costs kept wholesale prices flat. In France, industrial output for January is expected to retreat from a bounce in December. Wholesale inventories for January will be the primary U.S. economic data release of the day.
Wednesday, March 11: Chinese economic data again takes center stage for market risk narratives, with the release of industrial production, retail sales, new loan and urban investment data for February. In Japan meanwhile, corporate goods prices for February and machinery orders for January are slated for release. In the U.K., industrial production measures for January are expected to improve over December with marginal expansion in the manufacturing segment. Mortgage Bankers Association mortgage applications data and Energy Information Agency oil inventory data will be the most significant macroeconomic releases for U.S. markets for the day. Discount mens formal wear chain Mens Wearhouse will report fourth-quarter 2014 earnings as the company continues to digest its acquisition of JoS. A. Bank.
Thursday, March 12: In Australia, February employment data will be carefully watched after the Reserve Bank of Australia left rates unchanged last week following a surprise cut in February. Major announcements in Europe include February consumer price index levels for Germany and France and January euro zone industrial production for January. In the U.S., weekly initial jobless claims and business inventory data for January will be released. The biggest announcement from a market sentiment perspective, however will be February retail sales figures, following an unexpectedly downbeat showing by shoppers in January. Volkswagen will announce quarterly results a noteworthy release in light of the unveiling the emission-free version of its $185,000 Audi R8 and a new large hybrid-powered four-door coupe at the Geneva International Motor Show last week. Separately, Dollar General will also announced release earnings on Tuesday. Hedge fund firms Paulson & Co. and Jana Partners have recently exited their positions in the discount retailer after its bid to purchase Family Dollar was thwarted.
Friday, March 13: Japanese industrial production and capacity utilization data for January will place Abenomics under the microscope, as the impact of a weakened yen on the Japanese economy has yet to fully deliver on external demand driven growth. In the U.S. producer prices for February are expected to remain subdued on weaker commodity and energy input costs while initial University of Michigan consumer sentiment data puts the spotlight on the U.S. shopper.