3 Numbers to Watch: Rehn speaks, ITA auction, US Trade Balance

For a quiet data week, Friday is even quieter. After yesterday’s European Central Bank meeting and last night’s terrible Japanese data, I doubt there will be such market-moving news today. US Trade Balance would normally be an important number, but in importance it ranks far below the fiscal issues and central bank actions in the trans-Atlantic game. Watch out for the Federal Reserve’s Plosser – he speaks at 14:30 GMT.

Policy Briefing by EU Commissioner Olli Rehn (07:00-08:30 GMT): Olli Rehn, European Commission Vice-President for Economic and Monetary Affairs and the euro, will lecture at the European Policy Centre on the topic of The EU and the economic crisis - the next steps to recovery. Due to less important macro data today, I believe only somewhat sarcastically that the number of steps that the Commissioner sees are needed will create a headline or two – and I would not be surprised if these move the markets.

Italy Treasury Auction: After Thursday’s very successful auction of Spanish bonds and Italian bills (see Reuters, Bloomberg and Ken Veksler’s squawks #1 and #2) today’s medium-long bond (3 year BTP) auction will be of interest for several reasons. All Eurozone government bonds issued after 2012 will include CACs (collective action clauses). CAC allows a two-thirds majority of bondholders to force the minority to participate in a possible restructuring. After the fiascos of the Greek bond holdouts it was decided that if a restructuring is needed, a smooth process would be desirable.

The yields in the secondary market are near crisis-lows both in Spain and Italy, and after Thursday’s auctions and the ECB’s upbeat governor Draghi, the Italian auction should go down quite well. But…this is currently the market expectation. With the Italian elections providing some uncertainty and bid-to-cover expectations already running high, a positive market reaction in EURUSD and risk assets is not guaranteed.

US November International Trade (13:30 GMT): Trade deficit (goods and services) is expected to decrease to USD 41.2 bn from the previous month’s USD 42.24 bn. In October the exports were USD 180.51 bn and imports USD 222.75 bn. The chart clearly shows that during the last two recessions both import and export trade decreased (kind of makes sense), but imports seem to have decreased even more than exports, thus decreasing the trade deficit during recessions. This makes the 2012 numbers look bad as the lower trade deficit is just a sign of deteriorating trade during a recessionary period. Due to Europe’s growth slump, exports to the old continent will be interesting to watch.

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