- UK Manufacturing, Construction & Trade top modest run of dat, China
inflation to be digested; more aggressive Russia rate cut likely;
markets likely to be very intropsective
- UK Industrial Production: Forties pipeline outage to drag headline
output shrply lower; manufacturing to psot modest gain
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** EVENTS PREVIEW **
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In line terms, the day's calendar looks busy, but a closer look at exactly what is being published or happening in event terms highlights that with markets indulging in a bout of loss of confidence (reality check? Ed.), there is probably little outside of the run of UK data (post BoE) and Norways' GDP & CPI, which will have anything more than a passing impact. There are the China inflation readings and the resolutely neutral RBA SOMP to digest, along with Industrial Production readings from France and Italy, but little else apart from the rate decision in Russia. Bank Rossi governor Nabiullina has hinted that the Russian central bank may be more aggressive in cutting rates in the short-term, as such suggesting a 50 bps rate cut rather than the expected 25 bps to 7.50%, with inflation very well behaved at 2.5% y/y, still buoyant oil prices and a relatively strong RUB giving her plenty of room for manoeuvre.
** U.K. - Industrial Production, Trade & Construction Output **
- Following from the BoE's Q4 inflation report, its less pessimistic growth outlook and its somewhat less accomodative rate outlook, which in no small part was as a case of using the markets move since the start of the year to raise the probability of a rate hike, in order to carve itself out some extra room for manoeuvre - which looks to be straight out of the Yellen Fed playbook, today has official readings on the non-services part of the economy. Ironically they may well fly in the face of the greater optimism from the BoE. The Industrial Production data will be heavily distorted by the Forties pipeline shutdown in December, and this predicates expectations of a 0.9% m/m drop that would drag the y/y down to just 0.3%, Manufacturing Output is expected to post a modest 0.3% m/m rise, which thanks to a +2.7% m/m in December 2016 dropping out of the comparison will see the y/y drop to 1.2% from November's 3.5%. The ever erratic Construction Output is seen dipping 0.1% m/m for a drop of 1.9% y/y, though the often hefty revisions will require attention, and the January and February data will be of more interest in terms of any signs of broader contagion for the sector due to the collapse of Carillion. The Trade deficit is forecast to remain wide at £-11.55 Bln, though as ever revisions will be need to be watched for, but these will not alter the fact that there has been no evidence that the GBP drop ost the referendum allowed for many material improvement.
from Marc Ostwald