The data later in the month (like industrial output and durable orders) did not confirm these positive signs. Nevertheless, the ISM remains a powerful indicator and investors will pay attention to the readings, for it’s the most credible direction pointer among early indicators. The hopes are not elevated – investors expect the ISM in both industry and services to partly reverse last month’s gains to 34 and 41 for industry and services respectively. The same direction is expected for services in the euro zone and the UK and was already confirmed for industries in these areas. The most important data is scheduled for Friday though – the employment report. The situation on the US labor market is grim and consecutive weekly claims data point to a further deterioration. This is calculated into the market consensus assuming another 625k jobs to be lost and the unemployment rate to have climbed to as high as 7,9%. On Wednesday, investors will watch for an indication in ADP’s report on employment in a private sector (expected to shrink by 600k). Finally, we are faced with as many as four decisions on interest rates: in Canada and Australia on Tuesday and the UK and the euro zone on Thursday. The market expects the cuts of 25s in the first two cases and two 50s on Thursday. Such an intensive week starts just as the US’s S&P500 fell through the last support set by the 2008 autumn’s lows and is about to search for new minimums, dragging other markets with it and adding a selling pressure on the EURUSD and emerging markets.

Przemysław Kwiecień Chief Economist