Market movers today
Today is a rather quiet day in terms of data releases (so is the rest of the week actually). In the US, regional PMIs begin to tick in now and we estimate them to have declined from their extremely high levels, as they have overshot ISM/Markit PMI. The Empire manufacturing index data is due out today.
In Denmark, the GDP indicator for Q1 is due to be published today at 09:00 CET. We estimate GDP grew by 0.4% q/q in Q1, as private consumpt ion seems to have made a decent start to 2017 and thestatistics for business revenue are also pointing up.
In Norway, trade data for April is due out today but more important is the GDP data for Q1, which is due out tomorrow.
Selected market news
The German state election in North Rhine-Westphalia proved to be another victory for CDU/CSU and Angela Merkel. Given that Merkel continues to solidify her posit ion of strength, the ‘Schulz-effect ‘ fading and the fact t hat North Rhine-Westphalia is the most populous of the German states, the out come bodes well for Merkel’s chances of being re-elected as Chancellor at the general federal election in September.
While Chinese industrial production and retails sales released this morning were largely in line with expectations, we continue to see risks in China as tilted to the downside. PMI decreased sharply in April, commodity prices for oil and metals have lost momentum, there has been a sharp rise in yields and the Chinese stock market has fallen over the past month to the lowest level in four months See Strategy: Downside risks to China – and what it means for the market, 11 May 2017.
US retail sales and CPI data released on Friday confirmed that the US economy is slowing down. While retails sales remained st rong (although weaker than expected), the CPI data showcased an economy that is slowing down. Headline inflation decreased to 2.2% y/y (2.4% in March), but even more interesting was that core inflation was unable to offset the surprising drop seen in March – even with the timing of Easter having an upward effect on April’s print. On the inflation front, the market now shifts to April’s PCE prints (due to be released 30 May), which the Fed tends to prefer as its benchmark when reviewing economic conditions.
Trading during Asian hours has been fairly uneventful, with Japanese government bond yields slight ly lower, Nikkei slighter down and Hang Seng adding 0.5%. However, oil advanced after Saudi Arabia and Russia said they favoured extending production curbs.
