Ashburton: Weekly insights update : A mixed bag

Macro data was mixed last week yet, overall, the risk-on momentum continued. Markets seemed buoyed by an "above consensus" LTRO size from the ECB. There was also some relief that the Greek debt restructuring deal did not constitute a default, as determine

In the US, we had a slightly disappointing ISM manufacturing survey and weak durable goods orders in January. However, there were signs that February data may be better, with robust auto sales accelerating to over 15 million annual rate (the strongest level since Q1 2008).

Housing data was mixed, while jobless claims declined further and consumer confidence bounced.

European economic survey data was, as expected, at a more sluggish pace. However, unemployment data in Europe continues to deteriorate. The challenge of implementing austerity during a time of weak growth and rising unemployment remains a serious concern.

China's 2012 growth target was announced by Premier Wen at 7.5%. In our view, recent Chinese economic data is consistent with a slowing (but not crashing) economy and the data remains fairly robust. We have little reason to change our soft landing base case view given recent developments, although a raft of more January-February data will be released this week, which will give further clues into the economy's momentum.

This will be a critical week for the Greek debt restructuring deal. If enough private creditors do not agree to the terms, then the threat of an official Greek default, which triggers CDS contracts, is very real. While Greece is a small economy and the situation is widely known, it is the threat of financial contagion that is concerning, in particular the unpredictable consequences of a 'non-voluntary' default.

In China, Thursday sees the release of important economic data such as industrial production and inflation for the months of January/February. In the US, Friday's jobs report is the most important data point, although Monday's service sector survey will also be keenly watched.
It is a busy week for central bankers around the world, with rate decisions in Australia (Tue), Canada (Thu), Europe (Thu) and the UK (Thu) among the developed economies and Korea and Indonesia (both Thu) in Asia.