Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist
US data dominates as mixed Australia labour data and Fed Beige Book digested: US Retail Sales, Jobless Claims and NY/Philly Fed surveys top schedule; Turkey, Ukraine rate decisions, plenty of central bank speakers; more financials, Alcoa & Pepsico Q1 corporate earnings
Fed: ‘patience’ narrative slowly being displaced by taper timetable talk; policy stance still very reactive, not proactive
US Retail Sales: stimulus checks, weather effects to power strong gains on headline and core measures; sizeable upside headline outlier possible
US NY/Philly Fed: further strength expected: prices and supplier delivery times in focus
US Weekly Jobless Claims: downtrend expected to resume as Easter effects unwind
EVENTS PREVIEW
Today has a very busy looking statistical schedule, though in truth it is all about a deluge of US data (Retail Sales, Weekly Jobless Claims, Industrial Production, NY & Philly Fed and NAHB surveys) once the overnight Australian labour have been digested (headlines better than expected, but full-time employment fell 20K), with little else likely to attract market attention. The events schedule sees a further busy schedule of central bank, above all Fed speakers, with another EM central, Ukraine’s NBU expected to tighten policy (+50 bps), and Turkey’s TCMB seen holding rates at 19.0% despite the change of governor; the BoE also publishes its latest Bank Liabilities/Credit Conditions Surveys. The US Q1 earnings season continues with more financials (Bank of America, Blackrock, Charles Schwab, Citigroup) accompanied by a mix of real economy companies (Alcoa, Pepsico and UnitedHealth). There are also the comments from Clarida (highlighting that the Fed would react to a persistent rise in inflation) and an upbeat Beige Book (see graphic on the change in language in the Beige Book) to digest, following on from Powell talking about an ‘inflection point’ on the economy, which hint at a shift away from the ‘patience’ narrative which dominated in Q1, they remain reactive as Clarida stressed, policy will be ‘outcome’ not ‘forecast’ based.
** U.S.A. – Retail Sales, Weekly Jobless Claims, Industrial Production **
– Noisy US Retail Sales have been pretty much par for the course in recent months, and March will again be heavily distorted by ‘stimulus cheques’ as well as the unwind of weather effects in February, the latter above all noted in the already reported strong rebound in Auto Sales (13.3% m/m), and implying some upside risks to the consensus for a 5.8% m/m rise, and all the more so given a price led gain (9.1% m/m) in gasoline sales. Core measures are in fact expected to be even stronger – ex Autos and Gas 6.4% m/m, Control Group 7.2% m/m, which may prove to be correct, but headline could well be in the 8.0-10.0% m/m area. Weekly jobless Claims have risen over the past 2 weeks after hitting a low of 658K, with Easter and school holiday effects along with uneven lifting of activity restrictions across the country, but should see a reversion to the downtrend for this week’s report with a drop to 700K from 744K; Continued Claims are seen edging down to 3.70 Mln. Industrial Production is forecast to rebound 2.5% m/m from a weather affected 2.2% m/m drop in February, with Manufacturing Output expected to bounce 3.6% m/m, echoing March ISM and regional manufacturing surveys. Utilities output will likely drag, while manufacturing should recover from those weather effects, though supply bottlenecks, above all in the auto sector could exercise some restraint. As for the April NY and Philly Fed Manufacturing surveys, the NY survey is seen edging up to a solid 19.2 from March’s 17.4, while the Philly Fed index is seen dropping back from a 48-yr high of 51.8 to 40.2, which would be very strong by any historical standard. In the detail, the focus will be on Prices Paid and Received and Supplier Delivery Times. The NAHB Housing Market Index is expected to edge back up to 84 from 82, with easing lockdown restrictions and seasonal demand seen offering support, however a relatively sharp rise in housing prices, rising raw materials and labour costs, and a drop in Mortgage demand (MBA applications have fallen in 9 of the past 10 weeks) due to a rise in rates (ca. +40 bps) will likely act as a restraint, even if absolute levels of housing activity remain robust.
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ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
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