The weekly macro review for w/c 08 Apr 2019 – Data out late in the week confirmed the large degree of monetary stimulus now supporting the Chinese economy. Growth in total social financing in Q1 increased by +10.7% versus the same time a year ago. China’s trade data was still mixed – export growth was much stronger than expected but imports continued to decline. This suggests continued weaker domestic demand as well as likely weaker export trade data for some Chinese trade partners.
The ECB this week kept rates on hold, acknowledging that risks in the region remain tilted to the downside.
Three related US datapoints stood out this week. The FOMC minutes confirmed that, on balance, rates are likely to remain on hold through this year, despite
CPI and PPI data out this week indicate some price pressure returning from energy prices. This will be important to watch. While annual growth in the headline CPI accelerated between Feb and Mar due to a less negative impact from energy prices, the monthly change highlighted faster growth in consumer facing energy prices. Similarly, there was some upward pressure from energy prices in the PPI.
Any potentially faster inflation growth, in the absence of accelerating wage growth, is likely to hurt consumer sentiment. Commentary from the prelim consumer sentiment report for Apr highlights that – “what has been of increasing importance to consumers are rising nominal incomes, and low inflation, producing strong gains in inflation adjusted incomes”. Sentiment measures continue to move sideways.
A further reprieve on deadlines for Brexit. Although the “final” date has been pushed out to 31 Oct, there is a still a sense of urgency on striking a deal to avoid taking part in the European Parliament elections.
There are more data releases covered in last weeks review. Use the links on the contents page to navigate to different country sections. Download the review here;
The outlook for w/c 15 Apr 2019 – A short but very data heavy week.
Performance of the Chinese economy will likely be important this week with Q1 GDP growth, retail sales, and industrial production data to be released.
Given the large growth in monetary stimulus in Q1 in China and the first possible signs of improving activity, we will be looking for evidence of this starting to impact key trade partners.
US data will focus on domestic production and consumer spending as well as international trade. Of note will be retail sales (stronger motor vehicle sales should feature), inventories through the trade channels, industrial production, international trade and the first view of manufacturing and services PMI’s for Apr.
Japan CPI, final industrial production and international trade data will be released.
In Europe, the prelim manufacturing and services PMI’s for Apr will be important gauges of any improvement in manufacturing momentum especially. Also of note will be Eurozone trade and CPI data.
UK data; retail sales, CPI and the labour force data for the 3-months to Feb.
The RBA minutes will be released this week as well as the key
US-China trade negotiations will continue this week with a deal still expected to be completed within the next few weeks. US-Japan trade negotiations will commence this week. Further details on the commencement of US-Europe trade negotiations is also be expected this week.
The US International Trade Commission is likely to provide its analysis of the USMCA/NAFTA agreement shortly. The revised timing for the report was ‘mid-Apr’ due to the partial government shutdown. This will be a vital report in the process of ratifying the USMCA/NAFTA agreement by the US Congress.
US Treasury supply will be heavier this week but there will be another pay-down. The US Treasury will settle approx. $241bn in ST bills, notes,
More detail (including a calendar of events) is provided in the briefing document – you can download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
