NEWS / Foreign Exchange

New Home Sales, Consumer Confidence, Durable Goods Orders, Construction Spending, Personal Income & Spending

New Home Sales (February, Monday 10.00 am)

Forecast: 975K Consensus: 985K Prior: 937K

According to the National Association of Home Builders, home sales would improve modestly in 2007 influenced by prices cuts and non-prices incentives offered by builders. We expect new home sales to increase 4.1% to a seasonally adjusted annual rate of 975K in February from 937K in the previous month. Though housing demand appears to be stabilizing, problems in the sub-prime mortgage sector increase the risk of a sharper adjustment in coming months.

Consumer Confidence ( March, Tuesday, 9.50 pm)

Forecast: 110.9 Consensus: 109.0 Prior: 112.5

Consumer confidence could have deteriorated in March as gasoline prices and employment worsened. On the one side, prices at the pump rose in March, averaging $2.6 per gallon in the week ending March 17th. This is 8% higher than the average price of February. On the other side, employment creation has moderated, which could have damped consumers??™ perceptions on the labor market. In fact, consistent with these trends, the Michigan Consumer Sentiment Index -another gauge of consumers??™ assessments on economic conditions- declined to 88.8, the lowest in six months.

Durable Goods Orders (February, Wednesday 8.30 am)

Forecast: 4.2% Consensus: 3.5% Prior: -7.8%

In February, a rebound in orders of civilian aircraft boosted total durable goods orders, which we expect to increase by 4.2% after falling 7.8% in the previous month. Industrial production figures suggested that manufacturing could have been surmounting an inventories-correction process. Thus, orders excluding transportations could also have rebounded; we expect them to rise 1% in February after declining by 3.1% in the previous month.

Construction Spending (February, Friday 8.30 am)

Forecast: -0.4% Consensus: -0.6% Prior: -0.8%

Spending on residential construction will continue adjusting in tandem with the ongoing housing market correction. We look for a 0.4% decline in overall construction spending in February; 2.1% lower than the level of a year earlier. Spending on residential construction probably fell 0.9% in February from -1.8% in January. This is 14% below the level of a year earlier.

Personal Income & Spending (February, Friday 8.30 am)

Forecast: 0.3, 0.3% Consensus: 0.3, 0.3% Prior: 1.0, 0.5%

As February retailing figures suggested, consumer spending was hit by colderthan- average temperatures. Therefore, we expect PCE growth to moderate from 0.5% to 0.3% in February. Personal income would ease to 0.3% from 1% in January as the one-time effect of bonuses payments vanished. Regarding prices, PCE inflation probably rose to 0.3% in February from 0.2% in January largely reflecting weather-related pressures from foods feeds and beverages. On a year-over-year basis, headline PCE inflation would jump to 2.2% from 2.0% in January. Finally core inflation would remain steady at 0.3% in February reflecting recent increases in non-shelter components such as medical care. This is equivalent to a year-over-year rate of 2.4% from 2.3% in January.