28 February 2011 at 12:19 GMT
With the main hurdle in the European calendar, consumer prices, out of the way now we can turn our attention to the afternoon calendar where action is cranked up a notch or two.
US personal income and spending to rise... again
Since the official end to the Great Recession in the U.S. in June 2009 personal income has risen in all months bar three and only declined once. However, a chunk of this improvement in income has been due to the generosity of Uncle Sam as transfer receipts have risen 9 percent in that time span compared to 4.8 percent for income in total.
Consumers do not care one bit where income comes from, it seems, as spending is up 6.2 percent since July 2009, which has also had the effect of sending the savings rate back down to 5.3 percent from a peak of 6.3 percent in June 2010. The savings rate has declined in all months since July 2010, which means that Americans have slowed their develeraging - something which is also visible in consumer credit, which has been up every month since September 2010 (0.7 percent).
While personal spending and income may seem like the two biggies in today's spending report, we encourage you to study the price data - particularly in light of the recent rise in inflation as measured by the consumer price index. Of today's price series the PCE Core Price Index is of particular interest given the attention it gets from members of the Federal Reserve. Unlike the CPI, the core PCE price index does not yet show many signs of inflation. Indeed, the year-on-year rate is 0.7 - the lowest rate ever in its five decade history. To be fair the three month annualised measure has increased... but only to 0.4 percent from an all-time low of 0.3 percent. Keep this index in mind when worrying about U.S. inflation and Fed actions.
Other events to keep an eye out for this afternoon
Canadian GDP for December (Canada releases monthly GDP reports) is expected to grow 0.3 percent month-on-month after a 0.4 percent gain in November. Retail sales were poor in the Christmas month, falling 0.2 percent, though the blame was quickly pointed in the direction of the automotive industry (excl. autos, retail sales rose 0.6 percent). Manufacturing sales were better, rising 0.4 percent over the month, while housing starts disappointed with only 169,000 starts. Are we in for a negative surprise or are these numbers lost in the aggregation? We shall see!
Also keep taps on pending home sales, which is a good indicator of existing home sales as evidenced last week. Pending sales are expected by consensus to have declined 2.3 percent month-on-month in January. Chicago PMI at 14:45 GMT is a good indicator of tomorrow's major release, ISM Manufacturing. Consensus is looking for a slight deceleration in growth to 67.5 from 68.8.