Macro Events & News
FX News Today
European Outlook:
Risk aversion is picking up, with stock markets continuing to head
south in Asia, oil prices down and save haven assets rising. The EUR is
little changed against the dollar. However, European bond futures failed
to get support from rising risk aversion and a broad decline in stock
markets yesterday so weak leads won’t necessarily translate into a drop
in yields early in the session, especially if German data at the start
is hawkish. The data calendar is very busy see below for German figures
on GDP and CPI. Italy also has preliminary Q1 GDP and there are final
inflation numbers from Spain and Italy as well as French payrolls data.
German GDP and CPI:
The German economy gained pace at the start of this year. In the first
quarter of 2016, the gross domestic product (GDP) rose 0.7% on the
fourth quarter of 2015 after adjustment for price, seasonal and calendar
variations. GDP numbers are stronger than expected, the strong
expansion is unlikely to be sustained in the second quarter and the
risks to the medium term outlook remain tilted to the downside. Still,
for now the numbers back the ECB’s wait and see stance. Consumer prices
in Germany fell by 0.1% in April 2016 compared with April 2015. The
inflation rate – measured by the consumer price index – thus decreased,
following a slight increase in the previous month. A negative rate had
last been recorded in January 2015 (–0.3%). Compared with March 2016,
the consumer price index fell by 0.4% in April.
BoE Warns Brexit would Lower Growth and Lift Inflation:
The BoE once again voted unanimously to keep rates on hold today, as
widely expected. The uncertainty ahead of the Brexit referendum on June
23 is now clearly having an impact and the inflation report lowered the
expected growth trajectory even though it is based on the assumption
that the U.K. will remain in the EU. At the same time the MPC stated
very clearly that a a vote to leave the EU would lead to lower growth
and higher inflation. The implication for the monetary policy outlook in
such a scenario may be ambiguous, but the comments very clearly provide
further ammunition to the “remain” camp in the run-up to the
referendum.
Fedspeak: George (known hawk) said
rates are too low for current conditions, in her speech on “Longer-Term
Labor Market Trends, the Economic Outlook and Monetary Policy.” Boston
Fed’s Rosengren warned risk of a hike is bigger than markets think.
Cleveland Fed’s Mester (hawk): risks around Fed forecasts shouldn’t
paralyze policymakers, and oil prices and the dollar have partly
stabilized recently.
Main Macro Events Today
US Retail Sales:
April retail sales are out on later today and should reveal a 0.6%
(median 0.8%) headline with the ex-autos figure up 0.4% (median 0.4%)
for the month. This follows March figures which had retail sales down
0.3% and ex-autos up 0.2%. The outlook for the release looks promising
as vehicle sales rebounded to a 17.3 mln clip for the month alongside
continued strength in construction employment which could help lift
building material sales.
US PPI: April PPI is
out today and should reveal a 0.4% (median 0.3%) headline with a 0.1%
(median 0.1%) core increase for the month. The March headline was -0.1%
as was the core and inflation measures had been struggling to post gains
alongside the renewed downturn in oil prices that we saw over the
winter. Oil prices remain depressed but there was some rebound in April
which could help lift the PPI.
