NEW YORK, April 10 - A report on U.S. consumer sentiment during early April could get top market billing on Friday as investors shift their attention to how the economy will respond to the end of the war in Iraq. "Consumer sentiment counts the most because everyone will be scrutinizing the slightest piece of evidence on how people are responding to the events of the last few days," said Anthony Karydakis, senior financial economist at Banc One Capital Markets. The University of Michigan's consumer sentiment index, expected to reflect consumers' attitudes toward April developments in Iraq, is expected at 9:45 a.m. (1345 GMT). Economists polled by estimated, on average, that the preliminary April reading in the consumer sentiment survey is expected to be 78.1, up a bit from a final March reading of 77.6, according to economists polled by . If hints of a rebound in sentiment at the end of the March period lead to a higher-than-forecast sentiment reading, bond prices could suffer a setback.
The relative stability of bond prices over the past couple of days -- bond prices late Thursday were little changed from closing levels a week ago -- indicates that the safe-haven bonds may already have unwound their so-called war premium, strategists said. What remains, then, is the economy. Thus, up-to-date information on the economy in April, items like weekly department and chain store sales, the Philadelphia Federal Reserve's survey of regional business activity, the Empire State survey, and -- at the end of the month -- the Institute for Supply Management reports on April manufacturing are expected to attract a good deal of the market's attention.
"Everyone will be looking at the April numbers because people are realizing that from now on, the emphasis should be on the economic data, which in turn will determine what the Federal Reserve will do," said Karydakis. The retail sales report, due at 8:30 a.m. (1230 GMT), is likely to elicit only a tempered reaction from the market because it will be seen as a backward look at what Americans spent at retail establishments in March, a period when consumers and businesses were preoccupied first by impending war, and then by the opening days of the Iraq campaign. Economists polled by estimated, on average, that the U.S. retail sales rose 0.6 percent in March, after falling 1.6 percent in February. Excluding autos, sales were estimated to have risen 0.4 percent in March, after falling 1.0 percent in February. Just as the Commerce Department releases March retail sales numbers, the Labor Department will report on producer price trends last month.//