Markets focus on German money supply figures

 

GERMAN money supply figures (M3), which are expected to be released during the week, may give a further indication of Bundesbank intentions on interest rates.

"If we see a deceleration in April M3 then that's bound to boost hopes that the Bundesbank will sanction a lower rep orate in June", said Mr Craig Shute, fixed income analyst at Bear Stearns in London. The M3 money supply figures are expected any time, although analysts are talking about mid week as a possible time.

Forecasts are for a growth rate of 11.0 per cent, down from 12.2 per cent in March.

In the past week, the Bundesbank set its next two securities repurchase tenders at a fixed rate of 3.30 per cent.

"We should see a bit of decline in M3. But it might be a bit more disappointing than previously thought, so it's not clear that it will be large enough to trigger a German rate cut," said Mr Adrian Schmidt, international economist at Chase in London.

In the US, the Federal Open Market Committee (FOMC) meeting will take centre stage. Although a change in official interest rates is not expected, there is faint speculation that the Fed might change its stance from neutral to a tightening bias.