By Theresa Sheehan

PRINCETON (MNI) – The week ahead starts off with the Labor
Day observance on Monday, but even the shortened workweek is more than
enough to accommodate a light economic data release calendar.

A few Fed officials are out making comments in advance of the press
blackout period that begins in the following week and precedes the FOMC
meeting on September 21. Four major central banks make their respective
routine monetary policy announcements over the course of the week.

After a packed calendar in the prior week, there is relatively
little on the economic data schedule for the September 6 week, and
little of that will have much impact for markets.

The most important piece of economic data is not hard data at all.
The Fed’s Beige Book at 14:00 ET on Wednesday will cover approximately
the six weeks through the end of August. The last issue showed the
impacts of the oil spill in the Gulf of Mexico, and the blunting of
housing market activity after the end of the homebuyer tax credit
program. There were also the first hints of slowing in the factory
sector, as well as a pullback in consumer confidence. While the former
two are now largely behind us, the latter two may be more apparent.
Nonetheless, we anticipate growth to continue for all 12 District Banks,
albeit at a slower pace.

The only other data likely to capture market attention is the July
report for international trade at 8:30 ET on Thursday. One of the
largest sources of revision for the second quarter GDP was the widening
of net exports, and any hint that import growth continues to outpace
expansion in exports in the third quarter will be unwelcome.

The remaining economic reports will get only passing notice.

Jobless claims for the week ended September 4 at 8:30 ET on
Thursday should continue to lose the noise from technical factors that
pushed the level higher earlier in August. Although claims remain
elevated, the levels should be returning to a trend near the
mid-400,000s.

Data on wholesale inventories for July at 10:00 ET on Friday will
add another piece to the inventory puzzle. Factory inventories were
already reported up 1.0%.

Consumer credit outstanding for July at 15:00 ET on Wednesday
promises to continue to tell the same story of consumers reluctant to
take on new debt and paying down existing debt or closing credit lines,
and lenders being reluctant to extend credit.

The data on Job Openings and Labor Turnover (JOLTS) for July at
10:00 ET on Wednesday should be consistent with recent reports for slow
hiring, modest growth in new jobs, and limited non-voluntary
separations.

Central Bank Activity

There are four major central bank announcements on the calendar
this week.

The Bank of Japan governors meet Monday and Tuesday. This meeting
is unlikely to yield any new monetary policy developments after the
well-advertised “surprise” move on August 30, but their easing bias is
very much in place. The Reserve Bank of Australia makes its announcement
in the overnight hours of Monday-Tuesday, and has previously signaled
that the current tightening cycle is done for the moment.

The Bank of Canada makes its scheduled statement at 9:00 ET on
Wednesday, and may increase rates another 25 basis points. This would be
a third consecutive increase of 25 basis points, and bring the rate up
to 1.00%. However, it is not certain the Bank will deliver another
increase in the overnight rate as the language has been conditional.
Right now financial markets appear to be stable and the recovery
progressing, so odds favor another incremental hike. The Bank of England
is expected to hold policy steady when the Monetary Policy Committee
meets on Wednesday and Thursday.

The U.S. Congress returns from their summer break later next week.
We hope and anticipate that the Senate will promptly schedule a vote on
the nominees for the Board of Governors. It seems probable that a vote
on Janet Yellen for governor and vice chairman will be done quickly.
Right now the Board has only four seats filled, one short of the five
needed to take action in “unusual and exigent” circumstances. Although
there is no crisis in the offing, this situation should not be allowed
to persist. The vote on Sarah Bloom Raskin for governor is less certain
as the election season heats up. Political considerations could lead to
a delay in the vote for her nomination.

U.S. Treasury Auctions

The Treasury will auction new 3-year notes, and reopen the 10-year
note and 30-year bond from the third quarter refunding package. The
three issues will auction on Tuesday through Thursday, respectively, and
all settle on September 15.

** Stone & McCarthy Research Associates **

[TOPICS: M$$FI$,M$U$$$,MAUDS$]