By Theresa Sheehan

PRINCETON (SMRA) – The week-ahead is shortened by a government
holiday Monday. The economic data calendar is almost devoid of any major
releases, the U.S. Congress will be in recess, and public speakers will
be few and far between.

The Reserve Bank of Australia makes its routine monetary policy
announcement Tuesday, and no change in the cash rate is expected. The
Bank of England’s Monetary Policy Committee meets Wednesday and
Thursday. The European Central Bank’s Governing Council meets for its
session on monetary policy on Thursday.

No change in rates is expected for either of these central banks,
although it is possible they will announce some other measure to ease
strains in their financial markets and/or stimulate growth.

Monday, Minneapolis Federal Reserve President Narayana Kocherlakota
will be in Montreal, Canada to speak on lessons from the recent crisis
for monetary policy and regulation at the University of Montreal.

A thin U.S. data calendar is largely comprised of second-tier
reports that will have little market impact.

The most important of the week’s indicators is likely to be the ISM
Non-manufacturing Index for June at mid-Tuesday morning. However, it is
released after the employment data for the month, and thus will have
diminished importance. Nonetheless, any sign of further gains for the
service sector will not go unremarked.

Weekly initial jobless claims for the week ended July 3 out
Thursday morning will not yet have the jump in seasonal adjustment
factors that allows for the annual closure of factories for retooling;
that will take place in the subsequent two weeks. Levels of new filings
are probably on the rise with layoffs in government, and to some extent
from industries around the Gulf Coast states that are feeling the impact
of the oil spill.

It is also typical at the start of a new quarter to see an increase
in filings as it sometimes allows claimants to receive higher benefits.

Consumer credit outstanding for May released Thursday afternoon
should see some increases related to somewhat higher sales of motor
vehicles, but on the whole both the demand for new consumer credit and
its availability remain constrained.

The data on wholesale trade for May mid-morning Friday will provide
1/3 of the data for the business inventories report on July 14. Another
1/3 is the factory inventories, which will be reported on Friday, July

The same-store sales comparison data for fiscal June will be
reported as available on early Thursday morning. Weekly reports on
retail activity that are normally published on Tuesday will be released
on Wednesday due to the Independence Day holiday.

The new 10-year TIPS note will be announced on Thursday, July 1,
will auction on Thursday, July 8, and settle on July 15. On Thursday,
the Treasury will announce a new 3-year note, a reopening of the 10-year
note, and a reopening of the 30-year bond.

It is worth noting that Canadian employment data is due next
Friday. It normally goes hand in hand with U.S. data, and with the Bank
of Canada raising its key rate by 0.25% to 0.50% June 1, the market will
be keen to see if economy is slowing.

** Stone & McCarthy Research Associates **