IFR Preview-major US data for release April 5

WHAT: Institute for Supply Management Non-Manufacturing
 Business Index, March
WHEN: Tuesday 1000 EDT (1400 GMT)
FORECASTS         Reuters   IFR    Previous
Non-Mfg Index     59.5      59.9   59.7
IFR COMMENTARY: "IFR looks for the March ISM Non-Manufacturing
index to see a rise of just two-tenths of a point, to 59.9.
That would edge out the prior month's headline for the
strongest since August 2005, but, given that we already have
the March BLS employment report in hand, the ISM NMI release is
likely to be met with a yawn this month.
 We are guessing that most of the component indices will
fluctuate not far from last month's prints, but that the
employment index will scratch out a little bit faster growth in
line with growing strength in the private services payrolls
trend. In fact, March's 199k gain was handily the strongest
since November 2006. The 15k natural resources / mining gain
was the strongest since 1989, though it could well revert.
 In general, we look for slowly growing strength in
services, as the sector appears now to be on a convincingly
self-sustaining recovery path. It is not yet quick enough to
begin eating into unemployment at a rapid pace, and not
invulnerable to possible upcoming shocks (say, another flareup
of European fiscal troubles), but for now, at least, the track
looks solid."
-----------------
WHAT: Federal Open Market Committee minutes from March 15
meeting
WHEN: Tuesday 1400 EDT (1800 GMT)
NO FORECASTS
IFR COMMENTARY: "The minutes from the March 15 FOMC meeting
should confirm a less dovish mindset. Even the doves now appear
comfortable that the economic recovery is self-sustaining,
which should leave the main debate on the inflation picture
given a recent increase in upside pressure. While the meeting's
statement expressed a view that energy commodity price effects
are likely to be transitory, some discussion on potential exit
strategies is likely to be visible.
The minutes of the January 25-26 meeting stated that members
agreed that its statement needed only small changes to reflect
the improved near-term outlook and to make it clear that the
policy decision reflected a continuation of QE2. The March 15
statement saw the statement much more significantly changed,
suggesting the Fed felt a need to convey more than just an
improved economic outlook. Many of the caveats to a positive
growth outlook were removed, while upward pressure on prices
from energy and other commodities was noted.
 Following the meeting we have seen some hawkish comments
coming not only from recognized hawks such as Fisher and
Plosser, but also the more flexible but non-voting Bullard, who
suggested the $600 bln QE2 program could be trimmed by $100
bln. Plosser advocated an exit strategy of shrinking the
balance sheet and tightening rates concurrently, while Bullard
preferred to shrink the balance sheet first, a sign that
members are considering how to implement an exit strategy.
While the New York Fed has stressed that its open market
operartions to drain reserves are only part of prudent
operational readiness tests, the size of their reverse RPs has
been larger than in previous tests. The majority preference
still appears to be to let QE2 run its planned course to June
30, and the doves continue to note that economic slack is an
inflation restraint. Nevertheless, the debate is whether to
trim QE2 rather than whether or not to extend it, and the
upside risks on inflation have risen.
 This meeting, unlike that of January 25-26, had
above-consensus data from even the most recent core CPI and PPI
releases to note. Even if most Committee members still feel
underlying inflationary pressures remain contained, some
discussion of how to respond should they accelerate more
quickly than expected is likely to have been thought prudent.
The now ubiquitous 'extended period' reference, as a potential
obstacle to timely action, could also have received some
attention, though it was maintained on March 15, perhaps to
avoid accelerating market expectations too far.
 More dovish FOMC members (e.g., Evans) have made comments
downplaying the inflationary risks, but they have expressed
increased confidence in the growth outlook, and while still
dissatisfied with the likely pace at which unemployment will
fall, February's payroll growth (+222k private) meant that this
meeting came with a more positive picture on job creation than
the previous one. This increased confidence saw the statement
produce a notable absence of mentions of downside growth risks
due to rising commodity prices and events in the Middle East
and Japan. This optimism may not be entirely justified, with
the Q1 GDP outlook now looking significantly less positive to
us than we had thought at the start of the quarter. However, at
the time of the March 15 meeting, Fed officials appeared in
agreement that the recovery maintained its momentum despite
these fresh hurdles. This, coupled with increased upside
inflationary risks, should see these minutes produce a less
dovish tone."
 For more Reuters consensus forecasts for U.S. indicators,
double-click on [ECI/US]
 -- by Theodore Littleton and David Sloan of IFR Markets, a
unit of Thomson Reuters.


IFR Preview-major US data for release April 5