Animal Spirits, Minimal Spirits!
Price action is fairly muted considering the developments in the Middle East, as the markets seem to have developed some sort of a war news fatigue.
UoM showed a mixed consumer, possibly impacted by cumulative rise in consumer prices of almost 20% over the past few years- that's why consumer confidence at 77.9 - well below Feb 2020 level of 101.
The lesser-known Animal Spirits Index is worth a look - it started 2024 at a strong pace, increasing each month this year and rising further to 0.96 in March marking the fifth consecutive month it has remained positive - highest index value seen since April 2019
Atlanta Fed’s GDP Now tracking Q1 growth at 2.4% SAAR. Today's retail sales headline seen at 0.4% m/m -control group used for GDP computation expected at 0.4% m/m vs. 0.0% in Feb.
Fed speakers sound cautious. Schmid said there is reason to think that rates will stay higher for longer.Daly :“There’s absolutely, in my mind, no urgency to adjust the policy rate".Collins now sees Fed cutting later than she previously thought.
It is certain Chances of June ECB would go as was the case with Fed of June - stronger than expected US inflation to make ECB ultra cautious - however hawks & doves to continue battling for control of narrative. Simkus, Lane, and de Cos speak today. EZ IP exp 0.8% m/m. Stay short for 1.0611 break (1.0448-1.1139 at 1.0611)
Chinese private developers face $553 billion funding gap to complete pre-sold homes. Sector is crying for stimulus - but China reluctant. China: unchanged rate, of 2.5%, on this month’s MLF - added in 100bn yuan, not fully offsetting the 170bn yuan maturing -it’s peculiar that they are draining funds.
There will be plenty of BOE speakers this week. Breeden speaks today - Important.
Labour market data tomorrow- conditions easing to some degree but not enough to justify looser BOE. Close below 1.2500 targets 1.2368, 0.618% Oct-March rise.
Japan’s core machine orders blow past expectations supporting a case of cyclical recovery- weaker yen one of the reasons? - Suzuki says watching FX moves closely. However, the markets will be closely watching Mar national CPI on Friday. The market continues to price in only around 50 bp of tightening over next three years. 155.20 in reckoning.
83.45 the line in the sand...