The main release today will be the US ISM manufacturing index for February, wherewe look for a slight rebound to 52.3 following the sharp drop in January to 51.3. The drop in January was to a large extent probably related to adverse weather and webelieve this effect abated somewhat in February. Overall, we believe there is somereal slowing taking place in the US economy but the level of ISM is probably lowerthan the true underlying level. Bear in mind though that the weather was also bad inFebruary so there is quite a bit of uncertainty attached to the numbers also inFebruary. The US will also release personal spending and core PCE deflator. TheGDP data on Friday showed a decent downward revision to Q4 and this will also bereflected in the January data as the base effects from Q4 will be smaller. Also notethat the core PCE was revised up to 1.3% in Q4 from 1.1%. This will also be reflectedin today’s number. We look for a rise in nominal spending of 0.1% and a rise in bothheadline and core PCE of 0.1% – leaving real spending flat in January.
Final PMI data are due to be released before noon for the euro area in which Spanishand Italian PMI are included. UK PMI will also attract some attention. We generallylook for a little softening as global trade is losing a bit of pace due to the slowdown inthe US and China.
Finally ECB president Mario Draghi is due to speak in Brussels at 15:00. For the restof the week we look forward to the ECB meeting on Thursday and US non-farmpayrolls on Friday.
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Danske Bank