Dentalfloss
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- Digesting French election, China Trade and German Orders on otherwise
quiet day for data, Fed and ECB speak also due
- China Trade: industrial metals weigh heavily, still some signs of
residual lunar new year effects, markets focussed on credit / leverage
clampdown
- German Orders: impressive gains for Capital Goods and Consumer Durables
underline solid underlying momentum
- Week Ahead: US Retail Sales, China/US CPI & PPI, Europe Trade and
Production and German Q1 GDP top schedule; BoE and RBNZ rate decisions
..........................................................................
********************
** EVENTS PREVIEW **
********************
As markets digest the French election result, the stastistical focus will be on the overnight Chinese Trade data and German Factory Orders, with the only other items likely to attract any attention being the Canadian Housing Starts, in the context of its mounting housing sector woes, and the US Labor Market Conditions Index. A smattering of Fed (Bullard, Mester) and ECB (Mersch) speak provide the only items of of note. In respect of the China Trade, industrial metals and crude oil would appear to account for much of the weaker than expected 11.9% y/y rise in Imports, with Exports also slowing slightly more than expected, and there still appears to be some residual Lunar New Year timing effects. The fact that market reaction was rather limited, underlines that the focus remains unsurprisingly on the clapdown on credit and leverage, and the extent to which this may weigh quite heavily on the economy going forward, both in terms of imports, as well as the potential for some fall-out in credit markets. German Factory Orders were once again robust, with a 1.0% m/m rise following February's 3.5% m/m, with Capital Goods posting a 3.5% m/m rise (Feb 0.8%) and Consumer Durables (above all foreign) Orders seeing another very strong 5.5% m/m rise following February's 2.3% m/m. This data confirms that the underlying momentum in the German economy remains very robust.
- The Week Ahead (updated):
- With M Macron scoring a resounding victory in the French Presidential election, the initial question for the week is whether this was already well discounted in FX, rates and equities, and how quickly markets might fade any rallies. Given well documented demand for European equities predicated on relative valuations to the US, and optimism on the Eurozone growth outlook due to incoming data, this may be the asset class that outperforms in the short-term. Overall it will be a busy week for US and Chinese data, while Trade and Industrial Production feature in the UK and Europe, with Germany also publishing its provisional estimate of Q1 GDP. Politically, there will be continued focus on the UK general election, South Korea holds its presidential election on Tuesday, and G7 finance ministers and central bank governors will meet in Italy from Thursday through Saturday.
- Statistically: The US schedule is heavily back-loaded, with PPI on Thursday, ahead of the key CPI and Retail Sales on Friday. CPI is forecast to post 'average' rises of 0.2% m/m on both headline and core, which correspond to y/y rates of 2.3% and 2.0%, little changed from March's 2.4% and 2.0%, with gasoline again likely to act as a modest drag. Retail Sales are forecast to rebound 0.6% m/m after a lower than expected -0.2% m/m in March, with Auto Sales providing a boost, the core 'control group measure' is forecast to rise 0.4% m/m following on from March's 0.6%, per se offering some support for the idea that the Q1 dip in Personal Consumption was 'transitory' even if the question of whether a substantive rebound can be achieved without a pick-up in Auto Sales remains a concern. China's CPI and PPI are expected to rise to 1.1% y/y from 0.9% and fall to 6.7% and 7.6% respectively, with CPI continuing to see food price base effects act as a drag, while lower oil and commodity prices suggest the sharp rise in PPI over recent months may have largely run its course, ironically just when the PBOC and the authorities are tightening access to credit. For the UK, March Industrial Production and Manufacturing Output are again expected to confound the strength seen in sector surveys, with resources and utilities seen weighing on Production, where -0.2% m/m is forecast after February's -0.7%, while Manufacturing Output is seen unchanged after a modest -0.1% m/m, though surveys eminently hint at upside risks.
- Central Banks: Fed speak is plentiful and will be closely watched, above all for signals on balance sheet reduction, while the Bank of England and RBNZ are both expected to keep policy rates unchanged. In EM there are central bank policy meetings in Malaysia, Peru, the Philippines, Serbia and Sri Lanka - all of which are expected to see rates left unchanged. The Bank of England is nothing if not opportunistic, and despite much better survey readings for April, it will doubtless point to the weak Q1 consumer spending data as a key reason for leaning against tightening policy, and may also talk up the (modest) recovery in the GBP as offering grounds not to revise up its inflation forecasts, despite the faster then expected rise in both headline and core CPI. The press conference may prove to be a rather dull affair, in so far as the BoE will be at pains not offer any opinions that might be construed as 'interfering' in the general election; as such, this could prove to be something of a non-event. Given that incoming data in New Zealand has been rather better than most had anticipated, above all the uptick in Q1 CPI, Employment and Wages, many are expecting the RBNZ to bring forward the timing of an initial rate hike (from the current 1.75%) from 2019 to 2018.
- Govt bond auctions: The govt bond auction schedule sees the US offer $62.0 Bln of new 3, 10 & 30-yr Treasuries, there are no Gilt auctions, while the Eurozone has EUR 2-3. Bln of 5-yr Dutch DSLs, EUR 1.1 Bln of 10- & 30-yr Austrian Bunds, Germany sells EUR 500 Mln 30-yr I-L and EUR 3.0 Bln of 5-yr, while Italy's mid-month auction details are published later today, and is typically around EUR 8.0-9.0 Bln in total size.
- Corporate Earnings: Corporate earnings will again be relatively plentiful, even if the US schedule is now starting to wind down. Allianz, Deutsche Telekom, Hitachi, Petrobras, Toyota and Walt Disney are among the highlights, with Canada's beleaguered Home Capital Group also scheduled to report.
- Commodities: On the energy front the EIA publishes its monthly Short-term Energy Outlook, and OPEC its Oil Market Report, as attention continues to focus on this month's OPEC meeting, which increasingly looks like it will extend the current production cut 'deal'. However there remain considerable doubts about whether all countries will continue to participate, as well as actual compliance, and with China exports of energy products rising, the demand side of the equation continues to be a concern.
from Marc Ostwald
quiet day for data, Fed and ECB speak also due
- China Trade: industrial metals weigh heavily, still some signs of
residual lunar new year effects, markets focussed on credit / leverage
clampdown
- German Orders: impressive gains for Capital Goods and Consumer Durables
underline solid underlying momentum
- Week Ahead: US Retail Sales, China/US CPI & PPI, Europe Trade and
Production and German Q1 GDP top schedule; BoE and RBNZ rate decisions
..........................................................................
********************
** EVENTS PREVIEW **
********************
As markets digest the French election result, the stastistical focus will be on the overnight Chinese Trade data and German Factory Orders, with the only other items likely to attract any attention being the Canadian Housing Starts, in the context of its mounting housing sector woes, and the US Labor Market Conditions Index. A smattering of Fed (Bullard, Mester) and ECB (Mersch) speak provide the only items of of note. In respect of the China Trade, industrial metals and crude oil would appear to account for much of the weaker than expected 11.9% y/y rise in Imports, with Exports also slowing slightly more than expected, and there still appears to be some residual Lunar New Year timing effects. The fact that market reaction was rather limited, underlines that the focus remains unsurprisingly on the clapdown on credit and leverage, and the extent to which this may weigh quite heavily on the economy going forward, both in terms of imports, as well as the potential for some fall-out in credit markets. German Factory Orders were once again robust, with a 1.0% m/m rise following February's 3.5% m/m, with Capital Goods posting a 3.5% m/m rise (Feb 0.8%) and Consumer Durables (above all foreign) Orders seeing another very strong 5.5% m/m rise following February's 2.3% m/m. This data confirms that the underlying momentum in the German economy remains very robust.
- The Week Ahead (updated):
- With M Macron scoring a resounding victory in the French Presidential election, the initial question for the week is whether this was already well discounted in FX, rates and equities, and how quickly markets might fade any rallies. Given well documented demand for European equities predicated on relative valuations to the US, and optimism on the Eurozone growth outlook due to incoming data, this may be the asset class that outperforms in the short-term. Overall it will be a busy week for US and Chinese data, while Trade and Industrial Production feature in the UK and Europe, with Germany also publishing its provisional estimate of Q1 GDP. Politically, there will be continued focus on the UK general election, South Korea holds its presidential election on Tuesday, and G7 finance ministers and central bank governors will meet in Italy from Thursday through Saturday.
- Statistically: The US schedule is heavily back-loaded, with PPI on Thursday, ahead of the key CPI and Retail Sales on Friday. CPI is forecast to post 'average' rises of 0.2% m/m on both headline and core, which correspond to y/y rates of 2.3% and 2.0%, little changed from March's 2.4% and 2.0%, with gasoline again likely to act as a modest drag. Retail Sales are forecast to rebound 0.6% m/m after a lower than expected -0.2% m/m in March, with Auto Sales providing a boost, the core 'control group measure' is forecast to rise 0.4% m/m following on from March's 0.6%, per se offering some support for the idea that the Q1 dip in Personal Consumption was 'transitory' even if the question of whether a substantive rebound can be achieved without a pick-up in Auto Sales remains a concern. China's CPI and PPI are expected to rise to 1.1% y/y from 0.9% and fall to 6.7% and 7.6% respectively, with CPI continuing to see food price base effects act as a drag, while lower oil and commodity prices suggest the sharp rise in PPI over recent months may have largely run its course, ironically just when the PBOC and the authorities are tightening access to credit. For the UK, March Industrial Production and Manufacturing Output are again expected to confound the strength seen in sector surveys, with resources and utilities seen weighing on Production, where -0.2% m/m is forecast after February's -0.7%, while Manufacturing Output is seen unchanged after a modest -0.1% m/m, though surveys eminently hint at upside risks.
- Central Banks: Fed speak is plentiful and will be closely watched, above all for signals on balance sheet reduction, while the Bank of England and RBNZ are both expected to keep policy rates unchanged. In EM there are central bank policy meetings in Malaysia, Peru, the Philippines, Serbia and Sri Lanka - all of which are expected to see rates left unchanged. The Bank of England is nothing if not opportunistic, and despite much better survey readings for April, it will doubtless point to the weak Q1 consumer spending data as a key reason for leaning against tightening policy, and may also talk up the (modest) recovery in the GBP as offering grounds not to revise up its inflation forecasts, despite the faster then expected rise in both headline and core CPI. The press conference may prove to be a rather dull affair, in so far as the BoE will be at pains not offer any opinions that might be construed as 'interfering' in the general election; as such, this could prove to be something of a non-event. Given that incoming data in New Zealand has been rather better than most had anticipated, above all the uptick in Q1 CPI, Employment and Wages, many are expecting the RBNZ to bring forward the timing of an initial rate hike (from the current 1.75%) from 2019 to 2018.
- Govt bond auctions: The govt bond auction schedule sees the US offer $62.0 Bln of new 3, 10 & 30-yr Treasuries, there are no Gilt auctions, while the Eurozone has EUR 2-3. Bln of 5-yr Dutch DSLs, EUR 1.1 Bln of 10- & 30-yr Austrian Bunds, Germany sells EUR 500 Mln 30-yr I-L and EUR 3.0 Bln of 5-yr, while Italy's mid-month auction details are published later today, and is typically around EUR 8.0-9.0 Bln in total size.
- Corporate Earnings: Corporate earnings will again be relatively plentiful, even if the US schedule is now starting to wind down. Allianz, Deutsche Telekom, Hitachi, Petrobras, Toyota and Walt Disney are among the highlights, with Canada's beleaguered Home Capital Group also scheduled to report.
- Commodities: On the energy front the EIA publishes its monthly Short-term Energy Outlook, and OPEC its Oil Market Report, as attention continues to focus on this month's OPEC meeting, which increasingly looks like it will extend the current production cut 'deal'. However there remain considerable doubts about whether all countries will continue to participate, as well as actual compliance, and with China exports of energy products rising, the demand side of the equation continues to be a concern.
from Marc Ostwald
