• Markets:
    • Downtrend in EM equities and pro-cyclical sectors (relative) in the US continues. US equity pullback also continues, as does Treasury rally. 
    • In line with the risk-off tone, USD rallies. JPY and CHF trending upward. EUR, GBP fall as tightening cycles likely pushed back; other carry-trade recipients such as AUD and SGD holding up so far.
    • As last week, commodities generally remain at lows of the recent pullback, except in agriculture, where weather concerns have pushed up soybeans, wheat and corn. 
    • Portugal, Ireland, Greece, Spain yields at or around recent highs; Italian yields dropping back in the short term along with Bunds.
    • Narrative turns to economic disappointment, risk-off.
  • Newsflow:
    • Greek restructuring remains in the news. EU finance ministers say debt recscheduling is a possibility if other measures are taken first. ECB comes out strongly against it and threatens to withdraw support from the Greek banking system if it happens. This would be disastrous but they may be mad enough to do it — so politicians likely to opt to kick the can down the road again.
    • Spanish Socialist governing party fares badly in local elections — backlash against austerity. Berlusconi’s coalition loses in Milan, a heartland.
    • China was the world’s biggest gold market in Q1 because of inflation there.
    • China homes sales volume down 21% yoy — this could be important. Price gains continue outside major cities (where government controls seem to be biting).
    • Northern Sudan taked the disputed border oil town of Abyei from the South — potential for renewed war.
    • Egypt protest groups calling for another “day of rage” on slow progress in prosecutions of former regime leaders.
    • LinkedIn IPO pops; various commentators talk about a new tech bubble.
    • Send in the clowns:
      • Fitch cuts Greece three notches.
      • S&P puts Italy on negative watch.
  • Commodities:
    • Agriculture: mixed newsflow continues with poor conditions for winter and spring plantings in the US and Europe but plantings likely up in Argentina and China and the prospect of renewed exports from ex-Soviet countries. Some hints of dryness in Russia but conditions were recently reported to be good by offical sources. USDA may be too optimistic about this year’s crop, but it is early in the growing season and the likely trend is hard to call.
  • Data:
    • US:
      • Spike in initial claims appears to be receding.
      • Existing home sales flattening out at not unrespectable levels. Building permits and housing starts both disappoint; basically flatlining.
      • Philly Fed manufacturing index disappoints expectations, low level. Empire State manufacturing also disappoints, breaking its uptrend.
      • Industrial production 0% mom, disappointing expectations yet again. Capacity utilisation falls back. “Mid-cycle slowdown” is the story from Goldman Sachs.
    • Eurozone:
      • German PPI bounces back to 1% mom.
      • Current account remains on a volatile narrowing trend.
      • Flash PMI’s generally disappoint expectations but still show pretty average growth.
    • UK:
      • Consumer confidence back around 2009 lows.
      • Retail sales beat expectations at 1.1% mom.
      • Unemployment falls to 7.7%. Fairly large jump in claimant count, however.
      • Average earnings growth beats expectations but still historically low and basically flatlining.
      • MPC spits 3-6 against raising interest rates.
      • CPI up again to 4.5%; King blames energy costs, VAT.
    • Japan:
      • GDP worse than expected at -0.9% qoq.
      • GDP price index deflation continues at -1.9% yoy.
    • China:
      • HSBC PMI low again at 51.1, and worse than expected.
      • FDI 26% yoy — growth rate pulls back after rising for a while.
This Week
  • Tuesday:
    • German Ifo Business Climate.
    • UK public sector net borrowing.
    • US new home sales.
  • Wednesday:
    • UK revised GDP.
    • US durable goods orders.
  • Thursday:
    • US preliminary GDP and initial claims.
Next Week
  • Global PMI’s.
  • Non-farm payrolls.
Advertisements