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Eurozone Q1 preliminary GDP +0.4% vs +0.3% q/q expected

  
Analysis, Economy

Latest data released by Eurostat – 30 April 2019

  • Prior (Q4) +0.2%
  • Preliminary GDP +1.2% vs +1.1% y/y expected
  • Prior +1.1%; revised to +1.2%
Slight beats in the initial readings here and that should allow the euro to stay perky on the day as EUR/USD continues to threaten a break of the 200-hour moving average and establish a more near-term bullish bias above 1.1200. Well, so far it has been a positive day in terms of economic data releases for the euro so let’s see if the Italian Q1 GDP report can bring it home in the next hour.

Germany April unemployment change -12k vs -7k expected

  
Analysis, Economy

Latest data released by the Federal Employment Agency – 30 April 2019

Latest data released by the Federal Employment Agency - 30 April 2019
  • Prior -7k
  • Unemployment rate 4.9% vs 4.9% expected
  • Prior 4.9%
Unemployment change comes off more than expected but it’s nothing too notable as the seasonally adjusted unemployment rate continues to hold at a record low of 4.9%. All this sounds good on paper but the fact is that this hasn’t translated into meaningful wage or inflationary pressures in the euro area.

Here is what’s on the economic calendar in Asia today – China PMIs!

  
Analysis, Economy

China PMIs for April will be during the session here, 0100GMT and the private survey at 0145GMT

Preview here:

  • China April PMIs are released from Tuesday – heads up preview

Otherwise, from the top:

2200 GMT New Zealand financial statements for 9 months into the fiscal year-on-yearThis is where 2301 GMT UK data – GFK Consumer Confidence for April, expected -13, prior -13

2301 GMT UK data again, Lloyds Business Barometer for April, prior 10

2330 GMT Australia ANZ/Roy Morgan Consumer Confidence, week ended April 28.

  • Last week was a good jump to 119.5

0100 GMT New Zealand, ANZ business survey for April

  • Business Confidence prior -38.0 (this is running along at deep, deep lows)
  • Business Activity Outlook prior 6.3

0100 GMT China PMIs, preview here (ICYMI!):

  • China April PMIs are released from Tuesday – heads up preview

0130 GMT Australia Private Sector Credit for March

  • expected 0.3% m/m, prior 0.3%
  • expected 4.0% y/y, prior 4.2%
  • The weaker housing sector has impacted on credit growth (or vice versa … arguments rage!), its slow. I’ll be interested in the credit to business, which is part of the detail – the data has been choppy around a slow uptrend, its been decelerating from that slow trend also.

0145 GMT back to China for more PMI – this time the Caixin China General Manufacturing PMI

  • expected 50.9, prior 50.8

Lagarde says 70% of the global economy is still slowing

  
Analysis, Economy

Sobering reminder as stocks hit a record high

A bet on stocks right now is a bet that pivots from central banks will spark growth later in the year. For all the strength we’ve had in the past few months, there isn’t much backing from the data so far.
More:
  • Low inflation is ‘highly mysterious’
  • Says she expects China-US trade deal
  • Concerned about the overall level of global debt

Mnuchin: Hopes that US, China can finalise trade deal in two more rounds of talks

  
Analysis, Economy

Hopeful optimism? We’ve been here before…

  • Enforcement mechanism in US-China trade talks is close to done
  • Says that Chinese espionage issues are separate from trade, economic issues
  • Not concerned about US yield curve, not worried about recession risk
This feels like a paraphrase of the previous edition of optimistic headlines saying that we could’ve seen a trade deal in April and then May and as of last week, June. Nonetheless, the two parties are scheduled to meet again tomorrow so let’s see if there will be anything notable after their talks this time around.

The major economic releases next week

  
Analysis, Economy

FOMC rate decision. BOE rate decision. US employment report.

The calendar next week will be dominated by interest-rate decisions in the US and UK and the US employment report
Monday:
  • US core PCE
  • US personal spending and personal income
Tuesday:
  • China nonmanufacturing PMI
  • New Zealand ANZ business confidence
  • Germany preliminary CPI
  • EU preliminary GDP
  • Canada GDP
  • US employment cost index 1Q
  • US Chicago PMI
  • US consumer confidence
Wednesday:
  • New Zealand employment change and unemployment rate 1Q
  • UK manufacturing PMI
  • US ADP nonfarm payroll change
  • US ISM manufacturing PMI
  • FOMC rate decision and press conference
Thursday
  • China Caixin manufacturing PMI
  • UK BOE inflation report
  • BOE interest rate statement
  • BOE’s Carney press conference
Friday:
  • Australia building permits
  • UK services PMI
  • EU Flash CPI
  • US non farm payroll and employment statistics
  • US ISM nonmanufacturing PMI

The bellwether for global trade continues to send warning signals to markets

  
Analysis, Economy

South Korea’s economy contracts at its fastest pace since Q4 2008 in the first quarter of this year

South Korea GDP

If you’re wondering why South Korea is seen as a bellwether for global trade, it is because data from the country tends to be released among the earliest in developed markets and also the fact that South Korea is a key link in global supply chains. Hence, that makes economic data releases from the country a precursor for what markets should expect of the health of the global economy.
Although a slowdown in global economic conditions in Q1 is very much something markets are getting used to by now, April data for South Korea isn’t faring much better. 20-day exports data show a decline of nearly 9% compared to exports in April last year, as global demand continues to show further signs of weakness. In March, the 20-day exports data only declined by 5% year-on-year.
With exports demand still waning to begin Q2, there’s no doubt this will translate to similar sentiment across other major economies as well. I still believe markets are a bit too complacent in reacting to the global economic landscape for the time being as the impending US-China trade deal and better earnings results are blindsiding market participants from the fact that the health of the global economy is still deteriorating.
I reckon this will be a key theme to watch out for in 2H 2019 especially if the much hoped and much awaited global economic rebound is seen to falter.
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