Saxo Bank | Nov 28, 2012 05:13AM ET
Today's eurozone money supply numbers will provide context for assessing the ECB's early reaction to recession, while an update on German consumer prices reveals if disinflation is taking root. Later in the day, new home sales figures for the US offer another read on the state of the housing rebound.
ECB Money Supply (09:00 GMT) Is the European Central Bank firing up the monetary engines to offset the new slowdown that's squeezing the Continent? "The euro area will remain in recession until early 2013," the OECD advised earlier this week. Today’s release of money supply data for October will provide a clue on the ECB's reaction to another round of economic weakness.
In the previous monthly profile, M3 (the broad definition of money supply) increased 2.7% vs. the year-earlier level. Some analysts think that's a meager pace to deal with Europe’s macro headwinds, particularly for the ailing Club Med nations. It's still early for deciding how the central bank will proceed, but September's 2.7% rate for M3 is the second month of deceleration. The narrow M1 aggregate looks more encouraging, posting a 5.0% gain for the year through September, but here too the latest change is one of slower growth compared with August.
The favorable tailwind for housing leaves some wiggle room for today’s update on sales. Analysts also recognize that Hurricane Sandy may have dented demand last month. But an October number that’s anywhere near September’s level will be considered a sign that the positive trend is intact.
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