3 numbers to watch: German IFO, Canadian CPI, Euro meetings

The underwhelming economic reports continued yesterday with the US taking some hard hits. Not only did Initial Jobless Claims continued to go higher, but the Philadelphia Fed Business Survey plunged to -16.6 from -5.8 (0 expected) in what looks more and more like a rerun of last year. It is in fact also this index which crashed in August 2011 and sent recession chills up the spine of the markets. Having daid that these regional indicators are prone to overshoot in either direction compared with the overall economy and while we do look for weakness to continue in the coming months a recession is not on the cards.

Turning to today Germany will be the one to watch as its key IFO report is out on an otherwise rather slow day calendar-wise while Canada also offers a bit of news on its CPI inflation development.

• Jun. German IFO - Business Climate (08:00 GMT) to weaken further: It took a while before the severe contraction experienced in several areas of the single curreny union were felt in Germany but the indicators have slowed markedly in recent months underlined by yesterday's June PMI Manufacturing Index, which read 44.7 the lowest reading since mid-2009. The IFO - Business Climate (which consists of two subcomponents, Current Assessment and Expectations) is expected to ease lower to 105.6 from 106.9, but continues to signal a stronger (less weak) economy than does PMI Manufacturing. Current Assessment is seen declining to 112 from 113.3 while the forward-looking Expectations index is projected to go below 100 for the first time in 2012 to 99.8 from 100.9.

• May Canadian CPI (12:30) to decelerate as economy weakens: Canadian CPI inflation, like inflation in its neighbour to the South and in Europe, has decelerated in the last half year as economic weakness and also temporary factors related to the previous surge in commodity prices and Core CPI is also looking to have formed a top. Consensus expects CPI to slow to 1.5% y/y from 2% prior while the less volatile Core CPI is seen headed to 1.9% from 2.1%.

• Eurozone Finance Ministers meet in Luxembourg (07:00), European leaders meet in Rome: The beleaguered Eurozone's 27 Finance Ministers will meet today to discuss ways of implementing the new Stability & Growth Pact agreed upon back in March 2011 and will also look to discuss a financial-transaction tax.
  Eurozone heavyweights Germany, France, Spain and Italy will also meet today, in Rome, to talk about the debt crisis and how to avoid further contagion. Spain became the fourth and so far biggest country to request a bailout (or was it?) on June 9.