Dentalfloss
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- Manchester terrorist atrocity renders all else rather moot
- FWIW: PMIs, Ifo, UK PSNB, US New Home Sales top data run, as Trump
fantasy budget proposals and latest Greek debt failure digested;
Germany & US to sell 2-yr, UK sells 2036 I-L Gilt
..........................................................................
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** EVENTS PREVIEW **
********************
Another barbaric terrorist attack UK will cast a very long shadow over the UK general election (for which campaigning has been understandably suspended), the public and financial markets, and renders all else rather moot.
It will be a much busier day for statistics, particularly heavy on survey data, including Eurozone & US PMIs and the Ifo Business Climate which follows the detailed and unrevised German Q1 GDP, while the UK has April PSNB (generally largely ignored being data for the first month of the fiscal year) and CBI Distributive Trades survey, while the US also has New Home Sales and Brazil sees IPCA IBGE inflation. On the policy front there is a smattering of central bank speak, but the Trump administration's Budget request will be the most closely watched and discussed item of the day, even if it was always going to be more a case of fleshing out details on the various items that have been leaked or pre-announced. A cursory look at the not very substantial details of the budget proposal highlights numerous items, which do not even qualify as smoke and mirrors, but as fantasy accounting. For example, growth is expected to rise to 3.0% by 2021, yet the generally reliable CBO estimates 2021 GDP just 1.9%. Then there is the big piece of fantasy accounting in which the $5.5 Trln of tax cuts, and the $4.0 Trln of spending cuts are supposed to increase tax revenues by $2.0 Trln and sharply reduce the budget deficit in the medium term - there are some who may suggest that this looks like a Ponzi scheme. A busier day in terms of govt bond auctions sees German and the US sell new 2-yr, while the UK re-opens the 2036 Index-Linked Gilt.
** Eurozone / US - May flash PMIs / Germany - Ifo Business Climate **
- As is very often the case, forecasts for today's surveys are in principle rather agnostic, in so far as all are assumed to be unchanged or fractionally better than April readings. In terms of the Eurozone readings, there seems little reason to expect any marked setback in Germany either on the PMIs or the far more reliable Ifo survey. Of rather more interest will be France, with forecasts for both the Business Confidence and PMIs that any boost from Macron's election victory had already been discounted in the jump seen in recent months. As for the US, while the Manufacturing PMI is now broadly in with the ISM, the Services measure implies a much more subdued pace of expansion than the Non-Manufacturing ISM, particularly in April, where the latter rebounded sharply to 57.5, which in theory imparts a modicum of upside risk relative to forecasts. There will probably ne particular focus on the prices components, in so far as the more dovish ECB speakers continue to stress that core CPI offers few signs of a sustained pick-up, while there are many that continue to argue that US CPI is past its peak. Given the very political narrative to this week, today's surveys will need to spring some surprises to inspire anything more than a brief flurry of market activity.
** U.S.A. - April New Home Sales **
- Given the relatively small sample size, this is another inherently very volatile series, and as with the fall in Housing Starts, sharp rises or falls should not be over-interpreted in terms of underlying housing market trends. March's jump to a 621K pace, left the sales of new homes just fractionally short of a 9-yr high, and the anticipated 1.8% m/m drop to 610K would be little more than a very modest mean reversion, and could be larger. As ever inventories will need to be watched, though in contrast to a very clear shortage of existing homes, the stock of new homes has been steadily increasing, though regional variations are substantial, in no small part due to large variations in the availability of appropriate land for developers to build on.
from Marc Ostwald
- FWIW: PMIs, Ifo, UK PSNB, US New Home Sales top data run, as Trump
fantasy budget proposals and latest Greek debt failure digested;
Germany & US to sell 2-yr, UK sells 2036 I-L Gilt
..........................................................................
********************
** EVENTS PREVIEW **
********************
Another barbaric terrorist attack UK will cast a very long shadow over the UK general election (for which campaigning has been understandably suspended), the public and financial markets, and renders all else rather moot.
It will be a much busier day for statistics, particularly heavy on survey data, including Eurozone & US PMIs and the Ifo Business Climate which follows the detailed and unrevised German Q1 GDP, while the UK has April PSNB (generally largely ignored being data for the first month of the fiscal year) and CBI Distributive Trades survey, while the US also has New Home Sales and Brazil sees IPCA IBGE inflation. On the policy front there is a smattering of central bank speak, but the Trump administration's Budget request will be the most closely watched and discussed item of the day, even if it was always going to be more a case of fleshing out details on the various items that have been leaked or pre-announced. A cursory look at the not very substantial details of the budget proposal highlights numerous items, which do not even qualify as smoke and mirrors, but as fantasy accounting. For example, growth is expected to rise to 3.0% by 2021, yet the generally reliable CBO estimates 2021 GDP just 1.9%. Then there is the big piece of fantasy accounting in which the $5.5 Trln of tax cuts, and the $4.0 Trln of spending cuts are supposed to increase tax revenues by $2.0 Trln and sharply reduce the budget deficit in the medium term - there are some who may suggest that this looks like a Ponzi scheme. A busier day in terms of govt bond auctions sees German and the US sell new 2-yr, while the UK re-opens the 2036 Index-Linked Gilt.
** Eurozone / US - May flash PMIs / Germany - Ifo Business Climate **
- As is very often the case, forecasts for today's surveys are in principle rather agnostic, in so far as all are assumed to be unchanged or fractionally better than April readings. In terms of the Eurozone readings, there seems little reason to expect any marked setback in Germany either on the PMIs or the far more reliable Ifo survey. Of rather more interest will be France, with forecasts for both the Business Confidence and PMIs that any boost from Macron's election victory had already been discounted in the jump seen in recent months. As for the US, while the Manufacturing PMI is now broadly in with the ISM, the Services measure implies a much more subdued pace of expansion than the Non-Manufacturing ISM, particularly in April, where the latter rebounded sharply to 57.5, which in theory imparts a modicum of upside risk relative to forecasts. There will probably ne particular focus on the prices components, in so far as the more dovish ECB speakers continue to stress that core CPI offers few signs of a sustained pick-up, while there are many that continue to argue that US CPI is past its peak. Given the very political narrative to this week, today's surveys will need to spring some surprises to inspire anything more than a brief flurry of market activity.
** U.S.A. - April New Home Sales **
- Given the relatively small sample size, this is another inherently very volatile series, and as with the fall in Housing Starts, sharp rises or falls should not be over-interpreted in terms of underlying housing market trends. March's jump to a 621K pace, left the sales of new homes just fractionally short of a 9-yr high, and the anticipated 1.8% m/m drop to 610K would be little more than a very modest mean reversion, and could be larger. As ever inventories will need to be watched, though in contrast to a very clear shortage of existing homes, the stock of new homes has been steadily increasing, though regional variations are substantial, in no small part due to large variations in the availability of appropriate land for developers to build on.
from Marc Ostwald
