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Eurozone April industrial production +0.8% vs +0.4% m/m expected

  
Analysis, Economy

Latest data released by Eurostat – 14 June 2021

  • Prior +0.1%; revised to +0.4%
  • Industrial production WDA +39.3% vs +37.4% y/y expected
  • Prior +10.9%; revised to +11.5%

A solid beat and upward revisions as well, so overall that’s a good report as euro area industrial output shows a decent climb in April.

Production of durable goods was up 3.4%, capital goods 1.4%, and intermediate goods 0.8%. The only downside was non-durable goods, which fell 0.3% in April.

ECB raises 2021 and 2022 GDP forecasts

  
Analysis, Economy

The latest GDP forecasts

  • 2021 GDP +4.6% vs +4.0% prior
  • 2022 GDP +4.7% vs +4.1% prior
  • 2023 GDP +2.1% vs +2.1% prior
The consensus estimates are
  • 2021 +4.2%
  • 2022 +4.1%
  • 2023 +2.0%
These are some rosy numbers and that’s good for the euro — at least in as much as you can trust a central bank forecast. Notably, they aren’t forecasting any rate hikes and still see CPI below target through the horizon.

ECB forecasts

10-year Treasury yields continue to track lower towards 1.50%

  
Analysis, Economy

The market is quiet but keep an eye out on Treasury yields

10-year yields are down 2.2 bps currently to 1.51% but the low today hit 1.50% earlier and that is a key level to watch from a technical perspective.
USGG10YR
There hasn’t been much appetite for yields to move out of range per se since April (after failing to breach 1.75%) but we are seeing things start to get pinned closer to key levels with the 100-day moving average (red line) also resting nearby.
10-year breakevens have also retreated slightly to 2.36% from a high of 2.54% so the market is perhaps taking some cues from the Fed in recent weeks.
Tomorrow’s US CPI data will provide the next key catalyst for the bond market but in the meantime, a technical break may also weigh on yen pairs and the dollar later today.

World Bank global to growth reach 5.6% in 2021

  
Analysis, Economy

World Bank on global growthThe World Bank - G20 Insights

  • Global growth to reach 5.6% 2021 up from 4.1% in January. Strongest postrecession pace in 80 years
  • Gains in global growth comes after a -3.5% contraction in 2020
  • Forecasts 2022 global growth at 4.3% and 2023 growth at 3.1%
  • Increasing global growth reflects stronger US fiscal support, and highly unequal vaccine access
  • Sees US 2020 growth that 6.8%. That is up from 5.5% in January. In 2020 the US contracted by -3.5%
  • Sees China’s 2021 growth at 8.5% versus January’s 7.9%. Contracted -2.3% in 2020.
  • Sees global inflation to rise about one percentage point in 2021. May not warrant a policy response
  • Long-term expectations point to continued low and stable inflation.
  • Market concerns about persistent higher inflation in advanced economies could cause emerging market borrowing costs to rise
  • Sees emerging markets ex-China growth at 4.4% in 2021 versus 3.4% estimate in January. In 2020 emerging markets ex-China felt -4.3%
Some pretty decent increases in growth forecasts. Not much on inflation in their report which is the driving force for the markets. The US CPI data will be released on Thursday with expectations of a 0.4% rise after a 0.8% increase last month.

Japan GDP final for Q1 2021 -1.0% q/q (prior +2.8%)

  
Analysis, Economy
Finals:
  • GDP sa -1.0% q/q – if you check out the prelim numbers you’ll see this revised figure is not as bad.
  • GDP annualised sa -3.9% q/q
  • GDP nominal -1.3% q/q
  • GDP deflator (an inflation indication) % y/y
  • Private consumption -1.5% q/q
  • Business spending -1.2% q/q

Some background if you find useful:

  • state of emergency curbs to combat the coronavirus pandemic are sapping GDP growth, weighing on consumption.
  • Export growth is robust, which is a positive
  • rising energy and commodities prices could worsen terms of trade (Japan is heavily reliant on raw material imports)
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