Market movers today
It is a very quiet day in terms of major economic data releases.
In the US today, PCE inflation data for March is due out. However, these numbers will probably not at t ract very much at tent ion, as we received PCE inflation figures for Q1 on Friday, from which we can implicit ly calculate the monthly numbers for March.
More interestingly in the US, ISM manufacturing figures for April and final PMI manufacturing figures for Apri l are due out. Over the past few months, we have seen a divergence between ISM, PMI and regional manufacturing indices. The preliminary PMI figures for April fell back slightly but the regional indices continued climbing higher. We estimate ISM fell further in April. Our models continue to point towards a deceleration of economic growth and, therefore, we put less weight on the regional manufacturing indices.
Later this week (on Wednesday), the FOMC is set to meet. This meeting is one of the small meetings (no updated project ions and no press conference) and we do not expect any changes in monetary policy or any major changes in the statement .
There are no market movers in Scandi today.
Selected market news
On Friday, euro area HICP inflation rose more than expected to 1.9% y/y in April from 1.5% y/y in March. The euro area core inflation also came out stronger than expected at 1.2% from 0.7%. The higher core inflation was driven by service price inflation, which was 1.8% from 1.0%, whereas inflation in non-energy industrial goods was unchanged at 0.3%. This was clearly good news for the ECB. However, as there is a lot of uncertainty with inflation around the timing of Easter, westick to our view that the ECB will continue its QE purchases at EUR60bn per month going into 2018.
On Friday, in Sweden, retail sales figures decreased by 0.4% m/m in March. Retail sales came out at 1.9% y/y in March, which was much lower than the market expected (3.1% y/y). Retail sales in consumables (such as goods sold in department stores and specialised grocery stores) increased by 0.2% y/y, while durables (such as clothing stores, furniture stores, second-hand goods stores and mail order houses) increased by 2.4% y/y. Notably, one important explanat ion for the weak y/y outcome of the month is that the comparison is made with the Easter month of March 2016.
On Sunday, the US congress negotiators reached a tentative deal on an USD1.1trn bill to avert a shutdown of government this week, according to Republican and Democratic aides . The news triggered a subdued relief as Asian equities rose slightly and the USD/JPY soared. In fixed income markets, the 10-year US government bond yield has climbed by 1bp since Friday night . On the data front this morning, the Nikkei Japan Manufacturing PMI for April came out at 52.7 from 52.4 in March.
