Tomorrow's Data Docket: Inflation is the Word

Tomorrow, the economic data docket is filled with inflation numbers from around the world, as well as Canadian employment data. First off, at 21:30 est, Chinese inflation, both CPI and PPI numbers, are to be released. The consensus estimates for these numbers are 3.3% year-over-year and -.5% year-over-year respectively compared to the previous readings of 3.6% and -.3%. As Chinese growth continues to slow, so too will Australian growth. Later in the night, at 01:30 est, the Chinese Industrial Production numbers are released. The market is looking for a +12% year-over-year increase compared to a previous print of +11.9%. Watch the Aussie Dollar track these releases very closely either via spot or via the FXA FXA. A miss of this data will scare people away from Australian assets and will send the Aussie close to parity with the USD.

Later, Germany, Spain, and then England all release inflation data. The market will be especially concerned with these, as German and Spanish numbers will allow markets to judge how much room the ECB has to add liquidity, whereas the British inflation numbers will give us insight into the effects of the massive QE that has been embarked upon by the BOE. The market is looking for a 2% increase year-over-year in German CPI inflation, the same as the previous print, and a 1.3% increase year-over-year in Spanish CPI inflation, as compared to a previous print of +.7%. Investors will be especially concerned about Spain, as any weak data will be a reason to sell Spanish assets, including bonds and stocks. Watch the EUR/USD look to retest the lows of earlier this year, near 1.2850, on weak data. Lastly, British PPI for inputs and outputs is to be released at 04:30 est and the market is looking for a 1.9% increase year-over-year in input costs and a 2.9% increase year-over-year in output costs, as compared to the previous readings of 5.8% and 3.6% respectively.

Just before the New York open, at 08:30 est, US inflation and Canadian employment data are expected to be released. Canadian employment has been resilient lately, and the Canadian economy and stock market is considered to be a leveraged play on US growth. Watch the EWC EWC around this release, the ETF that tracks Canadian stocks. Being largely composed of banks, miners, and energy companies, this ETF should have a nice move on strong data. Also, the US is expecting inflation numbers at the same time, with the CPI and PPI releases. The consensus estimates are for a 2.8% increase year-over-year and a 2.1% increase year-over-year in CPI and PPI respectively. These compare to the previous readings of +2.9% and +2.8% respectively. This may sound counter-intuitive, but the market will probably sell-off on higher inflation, as fears of runaway inflation will dominate growth-fueled inflation, and will rally on a weak number, as weaker inflation will boost hopes for further Fed easing. Watch the 10-year yield and the dollar ahead of

The last bit of data is the Michigan Consumer Sentiment Index, at 09:55 est. This is expected to be essentially flat at 76.2, but with oil prices falling recently, this may surprise to the upside.