Main Macro Events This Week
Political events and will remain firmly in focus this week. The market resurrection since the November election is being assaulted from all angles as the asset allocation pendulum swings back in favour of safety and away from risk. Divergent signals are evident from “hard data” such as weak retail sales and GDP versus “soft data” like surging consumer confidence and ISMs. After campaigning against U.S. globalism and interventionism, Trump continues to speak loudly on Twitter, but is now carrying a big stick. Intervention in Syria and Afghanistan and now with a US Strike Group off the Korean peninsula risks signals continue to ramp up. Elsewhere France goes to the polls at the weekend and President Erdogan appears to have won the referendum in Turkey. Gold trades at $1,290.00
United States: The economic calendar resumes with the Empire State index forecast to slip (Monday) to 15.0 in April from 16.4 in March, along with an update on the NAHB housing market index, seen easing to 70 in April from 71. Housing starts are expected to sink 0.6% in March to a 1,280k pace (Tuesday), though permits are seen rising to 1,260k from 1,216k. Industrial production is set to grow 0.3% in March from 0.1% (Tuesday), while capacity use rises to 76.1% from 75.9%. MBA mortgage applications may again be positively impacted (Wednesday) by the drop in rates with increased geopolitical risks, while EIA energy inventories remain fluid. The Philly Fed index may take a hit (Thursday) and decline to 25.0 in April after the surge to 32.8 in March. Initial jobless claims are forecast to rebound (Thursday) 14k to 248k for the week ending April 15, while the leading indicators index may rise 0.2% in March (median 0.2%) vs 0.6%. The week rounds out (Friday) with April Markit PMI and March existing home sales set to rebound 3.1% to a 5.65 mln pace from 5.48 mln in February. A small handful of Fedspeakers will be on hand this week including, George, Resengren and Kaskari . Earnings continue this week and include; Bank of America, Goldman Sachs, IBM, Morgan Stanley and Verizon.
Canada: Only CPI and Homes sales of note this week. We expect CPI (Friday) to expand 0.5% m/m in March after the 0.2% gain in February. Gasoline prices tracked higher through March. Meanwhile, total CPI is seen slowing to a 1.9% y/y pace in March from 2.0% in February. The trio of core measures remained muted in February, consistent with a tame backdrop of underlying inflation growth. The March existing home sales report is also due Tuesday. Total existing home sales jumped 5.2% m/m on a seasonally adjusted basis in February, and another firm reading would not be a shock.
Europe: Another holiday-shortened week, with most markets still closed Monday for Easter holiday celebrations. Political event risks are moving back into focus meanwhile as the first round of the French Presidential Election on April 23 draws nearer. The data calendar has the final reading of Eurozone March HICP inflation, which is widely expected to confirm the headline rate at 1.5% and core inflation at just 0.7%. The fall back clearly below the 2% limit in March is partly due to the later timing of Easter this year, which saw holiday related prices rising in April rather than March, so the data doesn’t change the picture of gradually rising headline rates, which will keep pressure on Draghi and Co to at least drop the implicit easing bias from the statement, even if the QE schedule is confirmed until the end of the year.
UK: London markets reopen after the Easter break on Tuesday. The calendar is quiet, and Brexit related developments are likely to remain limited ahead of the April-29 EU summit, while negotiations aren’t likely to start in earnest until after German elections in September. The only data release of note this week is retail sales for March (Friday), which we expect to decline 0.3% m/m (median same) and February’s 1.4% m/m gain..
Japan: The March trade report (Thursday) is expected to reveal a narrowed JPY 500.0 bln surplus, versus the revised 813.5 bln in February.
Australia: The Reserve Bank of Australia’s minutes to the April meeting (Tuesday) is the main event, and there may be little of interest in the minutes. The RBA left its cash rate at 1.50% and stuck with dovish guidance in April, as had been general expected. Economic data is in short supply.
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