This will be a big week with more central bank meetings (FOMC and BoJ) and key data releases.
The US FOMC will meet this week with the policy decision due on Wed. No change is expected to the current policy settings. There is some anticipation around how the messaging might start to evolve over the next few meetings – especially concerning a possible timetable for tapering QE purchases. US data – especially upside or downside surprises, will be important to track over the next few months. For the moment, US data is coming in stronger on the back of significant stimulus in Q1 and likely positive impact from the vaccine rollout supporting reopening.
US data of note this week is the prelim release of Q1 GDP – expected to be +6.5% annualized (up from +4.3% in Q4). The Personal Income, Consumption, and PCE Price Index data for Mar will be released on Fri. This is expected to reflect the rollout of the Mar stimulus payments on income growth, higher expenditure, and higher core PCE price growth (expecting +1.8% in Mar versus +1.4% in Feb). Other data of note will be the University of Michigan Consumer Sentiment data for the end of Apr and several regional manufacturing surveys.
The BoJ will also meet this week. No change to policy is expected. The BoJ will release updated economic forecasts.
The prelim Eurozone Q1 GDP data will be released this week. The ECB kept policy unchanged last week – citing near-term downside risks for the economy, especially as many countries are still dealing with outbreaks. The prelim Eurozone CPI for Apr will also be released (expecting +1.6% versus +1.3% in Mar).
In Australia, CPI for Q1 will be released and annual CPI is expected to be +1.4% in Q1 versus +0.9% in Q4 – there may be some base effect.
QE purchases this week: The US Federal Reserve will purchase approx. $18bn in US Treasury securities this week (last week approx. $21bn). The new schedule of MBS purchases will be released on Wed this week.
US Treasury issuance will be heavier this week. The US Treasury will settle approx. $519bn in ST Bills, Notes (2yr, 5yr, and 7yr), Bonds, TIPS, and FRN’s this week, raising approx. $97bn in new money.
This week, approx. $65bn in ST Bills, Notes, Bonds, and FRN’s will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
