In February, Eurozone exports of goods to the rest of the world dropped -5.5% yoy to EUR 178.6B. Imports from the rest of the world dropped -2.7% yoy to EUR 161.0B. Trade surplus came in at EUR 17.7B, down from EUR 23.4B a year ago. Intra-Eurozone trade rose 1.7% yoy to EUR 164.8B.
In seasonally adjusted terms, Eurozone exports dropped -2.5% mom. Imports rose 3.4% mom. Trade surplus narrowed to EUR 18.4B, below expectation of EUR 25.4B. Intra-Eurozone trade rose from EUR 5.4B to EUR 168.4B.
New Zealand BusinessNZ Performance of Manufacturing Index jumped 9.4 pts to 63.6 in March, highest since the survey began in 2002. Looking at some details, production jumped from 58.4 to 66.8. Employment jumped from 50.2 to 53.5. New orders rose from 58.0 to 72.5.
BusinessNZ’s executive director for manufacturing Catherine Beard said “The two major sub-index values of Production (66.8) and New Orders (72.5) were the main drivers of the March result, with the latter experiencing its first post 70-point value. This does indicate a swift shift in demand over a relatively short time, which may indicate a move towards previously shelved projects and business ventures that have now been given the green light”.
China’s GDP grew a record 18.3% yoy in Q1, but missed expectation of 18.8% yoy slightly. The data was distorted by the low base as the economy was choked by the outbreak of coronavirus in Wuhan last year, which quickly spread to the world, and it’s still spreading. Nevertheless, the annual growth was still the strongest since record began in 1992.
March economic data was solid too. Retail sales rose 34.2% yoy versus expectation of 27.2%. Industrial production rose 14.1% yoy, missed expectation of 15.6% yoy. Fixed asset investment rose 25.6% ytd yoy, above expectation of 25.3%. Overall, the economy is on track to beat the government’s annual target of 6% GDP growth.
BoJ Governor Haruhiko Kuroda reiterated to the parliament today that there is no need to change the 2% inflation target. He expected inflation to be negative for now due to the impacts of the pandemic. But consumer prices will “rebound thereafter, gradually accelerate the pace of increase.” “It will take time, but it’s still possible to achieve our 2% inflation target,” he said.
Kuroda also said he hoped to deepen the debate with global central bankers on the role of monetary policy in addressing climate change. “There are many factors we need to take into account, such as how this will affect distribution of resources,” he said. “We hope to deepen debate in international meetings. I’m not saying we won’t think about possibilities at all.”
Cleveland Fed President Loretta Mester said in a speech that, “while the economy is still far from our policy goals of maximum employment and price stability, progress is being made and the economic outlook is brightening”.
“Sizable support from fiscal and monetary policy, vaccination deployment, and the resiliency shown by households and businesses, all point to a pickup in activity in the second half of this year and for continued progress, albeit uneven progress, as some sectors recover faster than others,” she added.
In the Q&A session, Mester said she expects the US economy to grow by 6% or more this year. Unemployment rate is expected to drop to 4.5% or even lower by year-end. She noted that uptick inflation expectations is due to improvements in economic outlook. “I’m not too concerned about inflation moving too high at this point,” she said.
Gold’s strong rally today should now have 1755.29 resistance taken out firmly, completing a double bottom reversal pattern (1676.54, 1677.69). The development is also the first sign that whole correction from 2075.18 has completed with three waves down to 1676.65, after hitting channel support.
Further rise is now expected back to 38.2% retracement of 2075.18 to 1676.65 at 1828.88. Sustained break there will further affirm this bullish case, and target channel resistance (now at 1886) for confirmation. Rejection by 1828.88, however, will retain bearishness for another decline. But after all, for now, near term outlook will stay cautiously bullish as long as 1723.53 support holds, in case of retreat.
US Empire State Manufacturing general business conditions rose to 26.3 in April, up from 17.4, well above expectation of 18.2. That’s also a multi-year high, well past the levels prior to the pandemic. 39% of respondents reported that conditions improved, while 12% reported that conditions worsened.
Philadelphia Fed Manufacturing current index rose from 44.5 to 50.2 in April, highest in nearly 50 years. Nearly 59 percent of the firms reported increases in current activity this month; only 8 percent reported decreases.
US retail sales rose 9.8% mom to USD 619.6B in March, well above expectation of 5.5% mom. That’s the best figure since Mary 2020. Ex-auto sales rose 8.4% mom, above expectation of 4.8% mom. Ex-gasoline sales rose 9.7% mom. Ex-auto, ex-gasoline sales rose 8.2% mom.
US initial jobless claims dropped -193k to 576k in the week ending April 10, well below expectation of 700k. That’s also the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -47k to 683k, lowest since March 14, 2020 too.
Continuing claims rose 4k to 3731k in the week ending April 3. Four-week moving average of continuing claims dropped -98k to 3763k, lowest since March 28, 2020.
In BoJ’s Regional Economic Report, assessments for two regions, Hokkaido and Tohoku, were downgraded. Hokkaido’s economy has “remained in a severe situation” and has been “more or less flat. Tohoku’s economy has “picked up as a trend” but impact of resurgence of coronavirus appears to be “growing recently”. Assessments of Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa were left unchanged.
Overall, BoJ said, “many regions — while noting that their economy had remained in a severe situation due to the impact of the novel coronavirus (COVID-19), primarily in consumption of services — reported that, on the whole, it had been on a pick-up trend or had started to pick up.”
Governor Haruhiko Kuroda said at the quarterly meeting of regional branch managers, “the pace of the recovery will be modest as caution over the pandemic remains.” Also, “services consumption will remain under pressure for the time being due to a resurgence in COVID-19 infections since last autumn.”
Australia employment grew 70.7k in March, double of expectation of 35.0k. However, growth was mainly driven by part-time jobs, which increased 91.5k to 4.20m. Full-time jobs contracted by -20.8k to 8.87m. Unemployment rate dropped to 5.6%, down from 5.8%, better than expectation of 5.7%. participation rate rose 0.2% to 66.3%, a record high. Monthly hours worked rose 2.2% mom or 38m hours, back to pre-pandemic levels.
Fed Chair Jerome Powell said yesterday that “we will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals”. He added that tapering would, “in all likelihood be before, well before,” Fed considers rate hikes and “that is the sense of the guidance”.
Separately, Vice Chair Richard Clarida said that if inflatoin expectations “drift up persistently”, policy would need to be adjusted. For example, if wages start to grow consistently faster than productivity, that would set the stage for a “sustained increase in inflation”. He added, “we are going to be very attentive to what we are seeing in the nexus between wages, productivity, prices and markups.
New York Fed President John Williams said, “the economy is coming back pretty strong right now.” “There’s a lot of things that are uncertain,” he added. “But I think the economy will be able to get back to full strength.” But he also acknowledged, “we’re a little bit in a race between the vaccinations and the new variants of the coronavirus.”
Fed Beige Book report noted that national economic activity “accelerated to a moderate pace from late February to early April. Consumer spending “strengthened” and reports on tourism were “more upbeat”. Auto sales also “grew”. The picture in non-financial services “generally improved”. Manufacturing activity “expanded further” despite widespread supply chain disruptions. Outlooks were “more optimistic” thanks to acceleration in vaccinations.
Employment growth “picked up” with most Districts noting “modest to moderate” increase in headcounts. But pace of job growth “varied by industry”. Employment expectations were “generally bullish” and wage growth “accelerated slightly over all”. Prices “accelerated slightly” with many Districts reporting “moderate price increase”. There were “widespread reports” of increased selling prices too.
US commercial crude oil inventories dropped -5.9m barrels in the week ending April 9, versus expectation of -2.4m barrels. At 492.4m barrels, crude oil inventories are about 1% above the five year average for this time of year. Gasoline inventories rose 0.3m barrels. Distillate dropped -2.1m barrels. Propane/propylene rose 1.0m barrels. Total commercial petroleum dropped -9.1m barrels.
WTI crude oil rises notably after the release and breaks 62.22 resistance. The development argues that corrective fall from 67.83 has already completed at 75.31. Further rise is now in favor to retest 67.83 high.
The rebound also came after WTI drew solid support from 55 day EMA, as a sign of near term bullishness. Break of 67.83 will resume medium term up trend to 38.2% projection of 33.80 to 67.83 from 57.31 at 70.30 next, which is close to 70 psychological level.
IMF Director of the European Department Alfred Kammer said in a blog post that “safe and effective vaccines are now available” and “an end to the pandemic is in sight.” “Virus mutations and vaccination delays are the prime concern,” he said. And, “the biggest worry over the medium term is economic scarring”.
Kammer also said, “the number one priority is to boost vaccine production” both for Europe and the World. But at the same time, “policymakers need to continue supporting the economic recovery.” Fiscal policy “needs to play an increasing role” where monetary policy becomes less effecting in boosting output.
He said that labor market policies “should remain in place”. Corporate sector support policies “should be more targeted toward viable firms and focus on strengthening firms’ solvency instead of simply providing liquidity”. Financial policies “should continue to enable banks to keep credit flowing.”
Additional support that “set at a level of 3 percent of GDP over 2021-2022” could lift GDP by about 2% by the end of 2022. It would also bring inflation closer to target in many countries and help “rebuild monetary policy space.”
Eurozone industrial production dropped -1.0% mom in February, worse than expectation of 0.5% mom rise. Production of capital goods fell by -1.9%, energy by -1.2%, durable consumer goods by -1.1%, intermediate goods by 0.7% and non-durable consumer goods by -0.1%.
EU industrial production dropped -0.9% mom. Among Member States for which data are available, the largest decreases were registered in France (-4.8%), Malta (-3.8%) and Greece (-2.5%). The highest increases were observed in Hungary (+4.8%), Ireland (+4.2%) and Croatia (+3.4%).
ECB Governing Council member Francois Villeroy de Galhau said, “our monetary policy should remain accommodative for the years to come, but our combination of instruments could evolve.”
“We could also have net asset purchases with our other program, APP, possibly somewhat adapted, and we would have the full range of what I call the quartet of our instruments.” The tools include the APP, negative interest rates, liquidity measures such as TLTROs, and forward guidance.
The combinations could facilitate a “possible exit of the PEPP by March 2022. Though, he emphasized, “we’re not yet there. We have time to judge.”
ECB Vice President Luis de Guindos said in a speech that “at the moment, risks from the early withdrawal of policies are higher than the risks associated with keeping support measures in place.”
He also surged that “all stakeholders”, partly fiscal ones, “must keep complementing our accommodative monetary stance”. For a timely recovery in Europe, “we have to avoid any cliff effects from the premature scaling back of these policies”.
Looking ahead, “completing the banking union and deepening the capital markets union are the best policy tools we have at our disposal to ensure that the EU financial sector is conducive to fostering long-term growth and that it embraces all the opportunities offered by the digital transformation and the transition to green technologies.”
BoJ Governor Haruhiko Kuroda said “while Japan’s economy remains in a severe state due to the pandemic’s impact, it is picking up as a trend”. As a whole, “recovery is being sustained as business sentiment improves for three straight quarters.”
Still, Kuroda warned that “downside risks remain high”. BoJ will continue to “patiently” maintain its powerful monetary easing to achieve the 2% inflation target.
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Eurozone CPI finalized at 1.3% yoy in March, EU at 1.7% yoy
Eurozone CPI was finalized at 1.3% yoy in March, up from February’s 0.9% yoy. The highest contribution to the annual euro area inflation rate came from services (+0.57%), followed by energy (+0.43%), food, alcohol & tobacco (+0.24%) and non-energy industrial goods (+0.09%).
EU CPI was finalized at 1.7% yoy, up from February’s 1.3% yoy. The lowest annual rates were registered in Greece (-2.0%), Portugal, Malta, Ireland and Slovenia (all 0.1%). The highest annual rates were recorded in Poland (4.4%), Hungary (3.9%), Romania and Luxembourg (both 2.5%). Compared with February, annual inflation fell in three Member States, remained stable in three and rose in twenty one.
Full release here.