Last week concluded on a relatively downbeat note as all major European markets closed down on the week with particular concern regarding the state of global manufacturing. Heading into this week, eyes will be firmly fixed on the newswires as the next five days are particularly data-heavy. Key releases to look out for from the US include Consumer Confidence, real GDP final revisions, personal income numbers as well as further manufacturing data from the Chicago PMI. Sifting through this deluge of US data will allow analysts to come to terms with the true nature of the US recovery and how it currently stands.
On Friday, the Eurogroup is set to meet once again in Denmark. The headline out of this meeting will likely concern the status of Europe's rescue funds. The possible outcomes are announcements that the two major funds, the EFSF and the ESM (due to come into action in July), are to run in parallel, with the alternative being the combination of the funds, with the remaining EUR 250bln in the EFSF carried over to the ESM. Contagion-wary countries, notably France and the European periphery, are strongly in favour of a boost to the funds, however there are still some that are yet to commit to the move. The IMF will keep a close eye on the meetings as the organisation has recently said it will not up its contribution until Europe makes the first move. European leaders, including Juncker and Rehn, have expressed their optimism that an agreement will be reached at the end of the week. Market participants will likely react to a positive decision with some risk appetite, as the funds will provide relief for those watching the peripheries, particularly Spain and Portugal, who remain concerned of the grey future of Mediterranean finances.
As for fixed-income markets, eyes remain on Southern Europe. This past week has seen Spanish borrowing rates top 5.5% for the first time in over two months, above that of Italy, whose rates had been above Spain's since the midpoint of last year. In terms of issuance, this week is light with no bonds set to be auctioned in the core European economies.
Elsewhere in Europe, markets await the German regional CPIs as well as the preliminary national reading. Analysts are expecting the monthly reading to come in at 0.3% for March, a fall from the 0.7% rate in February, however the figure still sees some upside risks, unsurprisingly, from fluctuating energy prices.
This week also sees the Nuclear Safety Summit held in Seoul, South Korea, with representatives from 53 countries attending, including US President Obama, Chinese President Hu Jintao and the EU's Van Rompuy. Hot topics for debate at the summit are likely to be the ongoing discussions with Iran and the fresh warnings of armament from North Korea last week, who are set to launch a satellite next month; however world powers have suggested that this may be a thinly disguised cover for ballistic missile testing. Any comments from the influential representatives at this meeting may take a toll on the energy complex, which has exhibited continued sensitivity in the past few weeks.