This week will be a quiet one for economic data. Earnings warnings, however, will likely dominate the trading action as they did last week.

There’s virtually no economic data out in Canada, this week – just housing start numbers on Tuesday. The U.S. schedule is quiet until Friday, when retail trade and producer price index numbers will be reported. This week’s jobs reports already has economists nervous about the economic picture.

CIBC World Markets says that markets are starting to lean toward a quarter point rate cut from the Bank of Canada the following week. Housing start numbers are expected to be strong, but not strong enough to assuage growth fears. Today’s jobs data has rate cuts looking more likely.

TD Bank economists say, “In our view, the current economic weakness in at hand will persuade the Bank of Canada to lower short-term rates by another 25 basis points in July and a further 25 basis points in August. But by early 2002, the Canadian central bank – like the Fed – will shift towards a tightening stance. How much tightening will be required? Given current interest-rate levels, rate increases of 75-100 basis points over the course of 2002 would move policy close to a neutral setting. Nonetheless, more aggressive tightening could be warranted next year, if the economies show signs of overheating.”

In the United States, today’s report has some economists saying the U.S. economy now looks recessionary. “In the U.S., markets will get a final look at Q2 consumer spending in the June retail sales report. Watch for PPI to signal the start of some very favourable news on inflation. Add it all up, and the week’s data look favourable for bonds. Equities are still struggling through the final earnings warnings, but we expect fewer negative surprises as we begin to get into the actual quarterly reports.”

BMO Nesbitt Burns says, “We believe markets will gradually become impressed with global disinflation pressures and that this will underpin bond prices. In the U.S., PPI and import prices for June should start the ball rolling on a downward inflation track.” Economists are calling for a 0.1% drop, although BMO suggests the slide could be as big as 0.3%.

The earnings schedule looks rather light this week, but that can be a problem as warning companies fill the void with their bad news. Teknion Corp. is set to announce its results on Tuesday, with C.I. Fund Management Inc. due to report Wednesday.

In the U.S., First Call says this is the first week a meaningful number of companies with a June ending quarter will report their results. “There will be enough companies reporting this week to give some idea as to what may be forthcoming in the two peak reporting weeks to follow.” Yahoo!, Redback Networks and Motorola should report Wednesday. On Thursday Advanced Micro Devices, Juniper Networks, Rambus and Dow Jones are due to report. General Electric may also report on Thursday.