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May 02, 2024
U.S. March trade balance little changed, Canada's moves into deficit
May 2, 2024 1:33 PM UTC
March’s US trade deficit of $69.4bn was marginally down from $69.5bn in February as a deterioration on the goods deficit was offset by a correction higher in the services surplus. Canada’s trade data was more surprising, a C$2.23bn deficit, and the largest deficit since June 2023.
U.S. Unit Labor Costs and Initial Claims suggest inflationary risk from labor market strength
May 2, 2024 12:56 PM UTC
Initial claims at 208k are unchanged at a very low level while continued claims at 1774k are also unchanged, the preceding data revised from 207k and 1781k respectively. The labor market remains tight while unit labor costs saw a significant bounce to 4.7% annualized in Q1.
BoE Preview (May 9): Easing Bias Clearer?
May 2, 2024 11:06 AM UTC
In flagging no need to be dominated by Fed policy, we think that the BoE is not only moving towards rate cuts but the MPC majority may be overtly advertising such a likelihood. But we do not see any move at the looming May 9 verdict, with Bank Rate again likely to remain at 5.25%. But the accompan
China Politburo: Help for Housing, But No Game changers
May 2, 2024 10:50 AM UTC
Politburo statement in late April suggests extra support for residential property. However, we see this as being incremental rather than any game changers and we still see residential investment remaining a negative drag on 2024 GDP growth.
May 01, 2024
FOMC Still Waiting For Data to Justify Easing
May 1, 2024 7:58 PM UTC
The May 1 FOMC statement, and Chairman Jerome Powell’s press conference, while noting recent inflation disappointment, did not deliver a strong pivot in tone. The Fed is still waiting for data to allow easing to take place, but still expects inflation to slow, and looks ready to respond once data
South Africa’s Fiscal Outlook Under Spotlights as the Elections Are Approaching
May 1, 2024 6:45 PM UTC
Bottom line: South Africa policy makers remain concerned about government debt trajectory, large domestic and international financing needs and elevated country risk premium before fast-approaching elections on May 29. We think South Africa’s general government fiscal balance and debt trajectory w
FOMC Notes Lack of Further Inflation Progress, QT to be Tapered in June
May 1, 2024 6:27 PM UTC
The FOMC has left rates at 5.25%-5.50% as expected and added to its statement that in recent months there has been a lack of further progress towards the 2% inflation objective. Otherwise the changes to the statement were fairly minor other than announcing a slowing in the pace of balance sheet redu
U.S. March JOLTS report weaker, as is April ISM Manufacturing, but Prices Paid rise
May 1, 2024 2:30 PM UTC
March’s JOLTS report has seen a sharp decline in job openings, to 8488k from 8813k (the latter a modest upward revision from 8756k). This with a slightly slower ISM manufacturing index if 49.2 from 50.3, hints at slowing activity in early Q2, though ISM prices paid at 60.9 from 55.8 are worryingly
Preview: Due May 2 - U.S. March Trade Balance - Deficit to increase on weaker goods exports
May 1, 2024 12:59 PM UTC
We expect March’s trade deficit to see a marginal increase to $69.2bn from $68.9bn, with a 2.0% decline in exports and a 1.5% decline in imports. This would be the fourth straight increase in the deficit to its highest level since April 2023.
U.S. April ADP Employment - Trend looking stronger, payroll implications unclear
May 1, 2024 12:39 PM UTC
ADP’s April estimate for private sector employment growth of 192k is on the high side of expectations though not quite as strong as the revised March gain of 208k (revised from 184k). ADP trend has picked up in the last three months but this may be catch up with strength in non-farm payrolls.
Sweden Riksbank Preview (May 8): When, Not If?
May 1, 2024 8:09 AM UTC
It seems to be a question of when, not if as far as policy easing is concerned. Even at it previous policy assessment in February it was clear(er) that the Riksbank accepted that it could and should make its policy stance less contractionary, at least in conventional terms. But its last decision
April 30, 2024
Mexico GDP Review: 0.2% Growth but Still Subpar
April 30, 2024 5:54 PM UTC
INEGI released Mexico's Preliminary GDP for Q1 2024, showing 0.2% growth, slightly above expectations. Annual GDP slowed to 2.0% from 2.8% in Q4 2023. The economy is losing momentum due to tight monetary policy and weakened U.S. demand. Agriculture contracted by 1.1%, Industry by 0.4%, while Service
Preview: Due May 15 - U.S. April CPI - Core rate not quite as strong as the preceding three months
April 30, 2024 5:15 PM UTC
We expect April CPI to rise by 0.4% overall for a third straight month but with the ex food and energy pace slowing to 0.3% after three straight months at 0.4%. We expect the strong start to the year to fade as the year progresses, though inflationary pressures will still look quite significant in A
U.S. April Consumer Confidence - Labor markets seen as less strong
April 30, 2024 2:23 PM UTC
April consumer confidence with a fall to 97.0 from 103.1 is weaker than expected and the lowest since July 2022. The easiest explanation for this is rising bond yields and fading expectations for rate cuts, though there are hints that the labor market is losing momentum too.
UK GDP Preview (May 10): Fragile Sideways-Moving Activity Continues?
April 30, 2024 2:19 PM UTC
The economy may have been in only mild recession in H2 last year, but the ‘recovery’ now evident is hardly much better with GDP growth only modestly positive. Admittedly, coming in as largely expected, and despite industrial action, GDP rose by 0.1% m/m in February accentuating the upgraded 0.
Canada February GDP - Q1 looking less positive than previously projected
April 30, 2024 1:20 PM UTC
February Canadian GDP saw a second straight rise, but at 0.2% was below the 0.4% projected with January’s data and January was revised down to a 0.5% increase from 0.6%. The advance estimate for March is unchanged, which would leave a 0.6% rise (2.5% annualized) in Q1.
U.S. Q1 Employment Cost Index - Acceleration will add to Fed concerns on inflation
April 30, 2024 12:46 PM UTC
The Q1 Employment Cost Index with a 1.2% increase is stronger than expected and like Q1 inflation data, breaks a trend of gradual slowing seen in late 2023 to produce a renewed acceleration, rising by its most since Q1 2023.
Preview: Due May 1 - U.S. April ADP Employment - Underperforming payrolls
April 30, 2024 12:10 PM UTC
We expect a 150k increase in April’s ADP estimate for private sector employment growth, which would be in line with recent trend, but continuing to underperform private sector non-farm payrolls, which we expect to rise by 195k. We expect overall payrolls to rise by 255k.
Eurozone Data Review: Less Weak But Soft Domestic Demand Taking Less Toll on Core Inflation?
April 30, 2024 9:29 AM UTC
According to revised official national accounts data, the EZ economy was in recession in H2 last year, albeit modestly so and against a backdrop of marked, if not increasing, national growth divergences. This geographical variation continued into Q1 (Figure 1) where the flash GDP reading exceeded ex
April 29, 2024
Preview: Due May 14 - U.S. April PPI - New Year strength fading
April 29, 2024 6:08 PM UTC
We expect a 0.3% increase in April’s PPI, with gains of 0.2% in the core rates ex food and energy and ex food, energy and trade. The core rates would match March’s outcome which slowed from above trend gains in January and February.
Mexico GDP Preview: Stagnation in the First Quarter
April 29, 2024 5:22 PM UTC
INEGI will release Mexico's Preliminary GDP data, indicating 0% growth in Q1, likely due to stagnation in key sectors like manufacturing and construction. The service sector, hit hard by the pandemic, also shows signs of sluggishness. While recovery is expected, sustained poor growth raises concerns
UK Consumers: Rent the Growing Hit to Spending Power
April 29, 2024 2:02 PM UTC
The UK has faced a series of cost-of-living shocks in the last few years. Some such as the surge in food prices may even be reversing, while it now looks likely the BoE hiking cycle may also start to reverse, although rising market rates may mean little further fall in effective mortgage rates in
China: Depreciation Rather Than Devaluation
April 29, 2024 1:00 PM UTC
We feel that a devaluation of the Yuan is unlikely in 2024, both to avoid potentially politically destabilizing capital outflows but also to avoid upsetting the next U.S. president. Policy is geared more towards controlled depreciation to help competiveness but reduce other risks. The Yuan has a
Growth Gains But Inflation Pains: RBI's view on Indian Economy
April 29, 2024 12:42 PM UTC
Minutes of the latest Reserve Bank of India (RBI)'s monetary policy committee meeting revealed a nuanced outlook blending optimism regarding India's growth trajectory with apprehensions surrounding inflationary risks. While upbeat macroeconomic indicators paint a favourable picture, the committee re
Preview: Due April 30 - Canada February GDP - Another rise, but a slower one
April 29, 2024 12:20 PM UTC
We expect Canadian GDP to increase by 0.3% in February, slightly below a 0.4% estimate that was made with January’s report, where a strong 0.6% monthly increase was seen, flattered by the end of public sector strikes. We expect preliminary indications for March to be near flat.
Preview: Due April 30 - U.S. Q1 Employment Cost Index - Trend slowing, but still quite firm
April 29, 2024 12:12 PM UTC
We look for the Q1 employment cost index (ECI) to increase by 0.9%, matching the Q4 increase that was the slowest since Q1 2021. Yr/yr growth will continue to slow, to 3.9% from 4.2%, reaching its slowest since Q3 2021, but will remain well above the pre-pandemic trend.
Indonesia: MPC Review: Bank Indonesia Surprises With A Rate Hike
April 29, 2024 11:26 AM UTC
In a pre-emptive move to both curb inflationary pressures and safeguard the Indonesia Rupiah (IDR) against furhter depreciation, Bank Indonesia, in a surprise move, increased its main policy rate by 25 bps to 6.25%. However, further rate hikes are not expected as the central bank remains wary of hur
April 26, 2024
Argentina: Activity is Shrinking but that is the Price to Stabilize
April 26, 2024 5:52 PM UTC
The INDEC data for February reveals a 0.2% economic shrinkage, signalling a 5.1% drop since August 2023, potentially leading to a Q1 2024 recession. High inflation and fiscal adjustments are primary causes. Some foresee 0% April inflation due to price realignment and stable ARS. Despite low reserves
U.S. March Trimmed Mean PCE Price Index Slower at 2.9% Annualized
April 26, 2024 3:32 PM UTC
While March’s 0.3% Core PCE Price Index was a little firmer before rounding, and stronger than February data that was rounded up to 0.3%, the Dallas Fed’s Trimmed Mean PCE Price Index slowed to a 2.9% annualized pace from 3.4% in February.
Brazil: Credit Decelerating Amid Tighter Conditions
April 26, 2024 1:21 PM UTC
Despite the BCB's initiation of the cutting cycle, credit is anticipated to decelerate due to monetary policy lags. Enterprises face the most significant impact, with nominal growth dropping to 4.1% in February from 12.1% a year prior. While household credit growth slows to 10.4% annually from 17%,
U.S. March Personal Income and Spending - Q1 totals confirmed, Core PCE Prices provide some relief
April 26, 2024 1:12 PM UTC
March’s personal income and spending data confirms the Q1 totals released with the GDP report. Core PCE prices at 0.3% provide some relief by avoiding the 0.4% implied by Q1’s stronger than expected 3.7% annualized rise. March rose by 0.317% before rounding with revisions to February (to 0.266%
Headwinds To Long-term Global Growth
April 26, 2024 9:30 AM UTC
Bottom line: While much focus is on the cyclical economic position to determine 2024 monetary policy prospects, the 2025-28 structural growth trajectory differs to the pre 2020 GDP trajectory for major economies. While global fragmentation has a role to play, aging populations are already having a
April 25, 2024
FOMC Preview For May 1: Signaling Concern on Inflation, Tapering Quantitative Tightening
April 25, 2024 7:04 PM UTC
Bottom Line: The FOMC meets on May 1 and rates look sure to remain at the current 5.25%-5.50% target range. The statement is likely to see some adjustments to reflect recent disappointment on inflation while repeating that more confidence on inflation moving towards target is needed before easing. I
Preview: Due May 2 - U.S. March Trade Balance - Deficit to increase on weaker goods exports
April 25, 2024 4:57 PM UTC
We expect March’s trade deficit to see a marginal increase to $69.2bn from $68.9bn, with a 2.0% decline in exports and a 1.5% decline in imports. This would be the fourth straight increase in the deficit to its highest level since April 2023.
Preview: Due April 26 - U.S. March Personal Income and Spending - Upside risk in Core PCE prices given Q1 outcome
April 25, 2024 3:41 PM UTC
March personal income and spending data will be largely old news as we have already seen Q1 totals in the GDP report. The GDP details are consistent with gains of 0.6% in personal income, 0.8% in personal spending and 0.4% in core PCE prices, all 0.1% above our pre-GDP forecasts of 0.5%, 0.7% and 0.
U.S. March Pending Home Sales bounce follows sharp February rise in Existing Home Sales
April 25, 2024 2:14 PM UTC
March has seen a stronger than expected 3.4% increase in pending home sales. Normally pending home sales lead existing home sales but in this case we appear to be seeing a catch up with strength in February existing home sales.
Norges Bank Preview: Nothing New to Note?
April 25, 2024 9:29 AM UTC
Surprising few, the Norges Bank Board is very likely to leave its policy rate at 4.5% for a third successive meeting when it gives it next verdict on May 3. It is also likely to retain the thinking first aired at the December meeting, namely the ‘policy to stay on hold for some time ahead’ rhe
April 24, 2024
Bank of Canada Minutes Look to Gradual Easing, Divided on When to Start
April 24, 2024 6:44 PM UTC
Bank of Canada minutes from the April 10 meeting confirm a greater confidence on inflation falling, though there is disagreement within the Governing Council over when policy easing will become appropriate. There was agreement that easing would probably be gradual given the risks to the outlook and
Brazil: Wage Inflation Will Likely Not Be a Big Deal
April 24, 2024 3:19 PM UTC
Our analysis delves into recent trends in the Brazilian labor market, focusing on CPI and wage inflation. Utilizing a model akin to Ghomi et al. (2024) and Blanchard and Bernanke (2023), we dissect recent spikes in wage inflation and CPI growth. Notably, our findings suggest that recent wage spikes