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Different kettle of fish


fttsedaytrader...you idiot.....fancy trying to short that all the time...lol
 

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- Deluge of data accompanies month end, focus on Eurozone CPI, UK Credit
aggregates, US Pending Home Sales and Chicago PMI, as China PMIs,
Japan and Korea Production are digested; UK YouGov hung parliament poll,
surge in CNH s-t rates also in view

- Eurozone CPI: sharper than expected fall likely given Germany, France
& Spain readings, raising doubts over ECB dropping easing bias next week

- India Q1 GDP: marginal acceleration expected, anecdotal evidence implies
risks skewed firmly to the upside

- US Fed Beige Book: set to signal steady pace of expansion, focus on
whether consumer spending dip 'transitory', wages and labour demand,
any mention of loan delinquencies

- Charts: CNH 1 week rate, Iron Ore and WTI Oil

..........................................................................

********************
** EVENTS PREVIEW **
********************

Month end brings with it the usual rush of economic data, reaction to which may be muted by month end, though large misses relative to forecasts may prompt some volatility, with the Fed's Beige and some more Fed speak, Banco de Mexico's quarterly inflation report and an expected 100 bps rate cut in Brazil offering the other highlights on the schedule. On the data front, there are the overnight UK BRC Shop Prices and GfK Consumer Confidence, China official PMIs (encouragingly picking up, above all in Services), Japanese and South Korean Industrial Production and as ever erratic German Retail Sales to digest. While ahead lie French, Italian & Eurozone CPI, UK monetary and credit aggregates, Indian and Canadian Q1 GDP, and in the US the Chicago PMI and Pending Home Sales. For the oil market, the EIA's less than timely 'petroleum supply report' for March will attract attention given it sometime sees some divergence with weekly data, with the API weekly Inventories report also due later. There will doubtless also be considerable discussion about the YouGov poll in the UK indicating a hung parliament, though YouGov note that the methodology is volatile, with small changes in the raw data producing radically different results. Also in focus will be the 1600 bps surge (at its worst) in CNY offshore (HK) rates, as well as a further tumble in iron ore (see charts), despite a sharp pick-up in the Steel Sector PMI.

** Eurozone - May CPI **
- Following on from below forecast HICP reading in Germany (1.4% y/y from April 2.0%) and Spain (2.0% y/y from 2.6%) and Belgium (1.85% y/y from 2.28%), markets will be looking for sharper than expected falls in the Eurozone headline (f'cast 1.5% y/y) and Core CPI (f'cast 1.0%). As such this will leave some questions about what happens at next week's ECB meeting, both in terms of the staff forecasts, as well as the key issue of dropping the easing bias, as many expect and 'sources' were saying yesterday was being discussed, but far from 'baked in the cake', which is unsurprising given the very sluggish core CPI trend. That said the substantial upward revision to French GDP, and the broad array of hard and survey data do leave the ECB with a quandary in balancing growth and labour market trends against a narrower focus on inflation.

** India - Q1 GDP/GVA **
- India is set to remain the fastest growing economy in the world, with a modest acceleration to 7.1% y/y seen after Q4's 7.0%, the latter seeing barely any impact from 'demonetization'. The risks would appear to be potentially very significantly to the upside of the consensus, with a broad array of indicators seeing a marked improvement in recent months. Industrial Production at 2.7% y/y proved stronger than the expected 1.5%, while auto sales, retail lending, consumer goods imports and shopper traffic have all accelerated, perhaps indicative of consumers looking to beat price hikes due to the introduction of the Goods & Services Tax (GST) on July 1. Infrastructure Spending has also picked up and a "good" monsoon season is seen boosting key agricultural output in Q1 and the next quarter. The question remains whether the boost to consumer spending is in effect borrowing from H2, as consumers bring spending forward ahead of the GST introduction, or on the other hand whether the pick-up is actually a catch-up after a modest demonetization hiatus in Q4. There are also questions on the extent to which an array of layoffs in the key IT sector may act as a drag.

** U.S.A. - Fed Beige Book **
- Following on from Brainard's speech yesterday, which re-affirmed the high probability of a June rate hike, but as with other doves highlighted some concerns that the current inflation trend is sub-optimal, today brings the Fed's Beige Book, which will doubtless suggest growth is modest or moderate, as it has for much of the past 18 months. In the detail, the focus will be on whether there is evidence that private consumption is indeed picking up after a weak Q1, whether Manufacturing and Business Investment continues to pick up after a protracted period of weakness due to the drag from the resources sector, and whether residential and non-residential construction continue to expand at a solid pace. Consumer and price pressures appear likely to have been muted, on the other hand it is likely that the report will again note as it did in April: "Modest wage increases broadened, and reports noted bigger increases for workers with skills that are in short supply. A larger number of firms mentioned higher turnover rates and more difficulty retaining workers." Last but not least, some attention needs to be given to reports on consumer lending, given an array of reports suggest auto and student loan delinquencies are on the rise.

from Marc Ostwald
 
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