Thursday 30th April: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei down 2.70 %, Shanghai Composite fell 0.10 %, Hang Seng lost 0.90 %, ASX declined 1.20 %
  • Commodities: Gold at $1202 (-0.65 %), Silver at $16.50 (-1.25 %), WTI Oil at $58.60 (+0.05 %), Brent Oil at $65.50 (-0.10 %)
  • Rates: US 10 year yield at 2.023, UK 10 year yield at 1.822, German 10 year yield at 0.285

Federal Reserve/FOMC:

  • FOMC Rate Decision (APR 29): 0.25% actual vs 0.25% estimate, 0.25%
  • Fed sees moderate growth, job gains even after 1Q slowdown; winter slowdown partly reflects “transitory factors”
  • Fed: Household-spending growth fell, real incomes rose strongly; it repeats wants to be “reasonably confident” on inflation
  • Fed: Longer-term inflation expectations in surveys are stable; business investment softened, exports declined
  • Fed repeats risk to economy, job outlooks nearly balanced; market-based inflation compensation gauges remain low
  • Fed: Below-goal inflation partly reflects falling import prices; it sees inflation rising toward 2% in medium term
  • Fed’s outlook downgrade signals late rate hike – RTRS
  • U.S. economy stumbles in first quarter as weather, low energy prices weigh – RTRS
  • Fed Stays Vague on Rate-Hike Timing, but Sees Slower Growth as Blip – WSJ

News & Data:

  • Bank of Japan keeps interest rates and QE unchanged
  • BoJ Retains Plan For JPY 80 Trillion Annual Rise In Monetary Base By 8-1 Vote, Kiuchi Dissenting
  • RBNZ Keeps Its Cash Rate On Hold At 3.50%
  • RBNZ Would Cut Rate On Weaker Demand, Less Inflation Pressure
  • RBNZ: Inflation Expected To Pick Up Gradually
  • RBNZ Not Currently Considering Rate Increase, Expects To Keep Rates Stimulatory
  • RBNZ Policy Will Focus On Medium-Term Inflation Trend
  • RBNZ Will Continue To Monitor, Assess Emerging Flow Of Data
  • Japan Industrial Production -0.3 %, Expected: -2.3 %, Previous: -3.1 %
  • Australia Private Sector Credit 0.5 %, Expected: 0.5 %, Previous: 0.5 %
  • UK Consumer Confidence 4.0, Expected: 4.0, Previous: 4.0
  • New Zealand Building Consents 11.0 %, Previous: -6.3 %
  • Brazilian Central Bank Hikes Interest Rate 50 Bps To 13.25% As Expected

Markets Update:

The past three trading sessions have been very busy with various event risk and big moves in currencies. First, US GDP missed expectations by 80bps, which led to further USD weakness and a massive squeeze in EUR/USD. The FOMC then released their statement, which was neutral and didn’t provide much new information. What we do know now for sure is that a June rate hike will not happen, but rather in September or December. Again, the Fed highlighted that they will remain data-dependent, so the market is eagerly looking forward to the next series of US econ data releases, starting by NFP next week.

The Reserve Bank of New Zealand kept rates unchanged, but had a slightly more dovish tone in their statement, which led to a decline in the New Zealand Dollar. The bank said that it may cut rates if certain conditions are met, that being a decline in inflation expectations or domestic demand. It did also warn again about the NZD strength, saying that the NZD continues to be unjustifiably high and unsustainable in terms of New Zealand’s long-term economic fundamentals.

Finally, the Bank of Japan kept rates and the pace of QE unchanged, with only one member dissenting. The press conference is scheduled for 0730 UK time.

Upcoming Events:

  • 07:00 BST – German Retail Sales (0.4 % m/m, 3.2 % y/y)
  • 07:30 BST – Bank of Japan Press Conference
  • 07:45 BST – French Consumer Spending (-0.3 % m/m)
  • 07:45 BST – French PPI
  • 08:00 BST – Spanish GDP (0.8 % q/q, 2.5 % y/y)
  • 08:00 BST – Spanish CPI (-0.7 % y/y)
  • 08:55 BST – German Unemployment Change (-13k)
  • 08:55 BST – German Unemployment Rate (6.4 %)
  • 09:00 BST – ECB Economic Bulletin
  • 10:00 BST – Italian CPI (0.2 % m/m, -0.1 % y/y)
  • 10:00 BST – Euro Zone CPI (-0.1 % y/y)
  • 10:00 BST – Euro Zone Unemployment Rate (11.2 %)
  • 13:30 BST – US Initial Jobless Claims (290k)
  • 13:30 BST – US Personal Spending (0.5 % m/m)
  • 13:30 BST – Canadian GDP (-0.1 % m/m)
  • 14:45 BST – US Chicago PMI (50.0)
  • 15:30 BST – Bank of Canada Governor Poloz speaks

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