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UK PMI Manufacturing came out as expected at 61.5, while the M4 money supply detailed an increase to 0.8% from -0.6% which was good news. Mortgage Approvals rose to 45.723k, and there was a rise in Net lending to individuals to 1.5B. Mervyn King said of this yesterday that the economy appears to have rebounded in the early part of 2011 and this could trigger an interest rate rise in June. His comments did not guarantee his vote for higher interest rates, in keeping with his recent conflicting signals. Elsewhere in the UK house prices have had an unexpected jump in February to 0.3%, which compared to January’s 0.1% which could lead us to believe the housing market is suspended in a vacuum of uncertainty. 

Euro zone CPI came out as expected at 2.4% yesterday morning, as did PMI Manufacturing. The good news came from German and EU unemployment, with Germany hailing a decrease to 7.3% when 8.6% was expected and the EU saw a drop to 9.9% from 10.0%.

A recent document has been prepared in anticipation of the March 11^th meeting in Brussels which details the desire of Germany and France to push forwards the pact they laid out back at the start of February. The two countries wish to increase the scope and capacity of the emergency fund for bailing our countries which are cut off from the markets.  Meanwhile European inflation rates have been mounting as a result of the Middle Eastern protests; apparently inflation will be noticeably stronger than initially thought as there could be risks on the upside.

Yesterday the US saw construction spending drop to -0.7% which was down from the expected at -0.4%, while ISM Manufacturing came out better than expected at 61.4 for February. The ISM news was positive for the US but dollar was then hit a speech from Ben Bernanke, in which he announced the Federal reserve’s plan to ‘respond as necessary’ if  rising commodity prices cause inflation or kill off the economic recovery. These were the strongest remarks that we have heard from Bernanke regarding the rising oil prices and could mean that the Fed would tighten policy if inflation started to rise.

Hilary Clinton and Washington have warned that if Gaddafi does not leave Libya, the country could descend into a civil war. The statement came after Gaddafi allegedly sent troops into the western border area, increasing fears that the revolt could become more violent. The prime minister of Yemen, Ali Abdullah Saleh, has recently blamed Israel and the US for the Arab demonstrations, as protestors gather demanding the end of his regime.

Meanwhile Canada kept interest rates at 1% yesterday, as although global interest rates are rising, inflation in Canada seems to be consistent with their expectations.

After yesterday today is relatively peaceful when it comes to data releases, but not empty of interest. We start the morning with UK PMI Construction, which then moves swiftly into EU PPI at 10am. The rest is all coming from the US with ADP Employment change and the MBA Mortgage applications this afternoon. The Fed’s beige book is out tonight reporting on the current US economic situation.

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