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US durable goods orders down -1.0% mom in Feb, led by transport equipment

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    ActionForex.com
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    US durable goods orders dropped -1.0% mom to USD 268.5B in February, much worse than expectation of 0.4% mom rise. Ex-transport orders was flat 0.0% mom at USD 179.0B, below expectation of 0.2% mom. Ex-defense orders dropped -0.5% mom to USD 251.5B. Transportation equipment dropped -2.8% mom to USD 89.4B.

    Full durable goods orders release here.

    UK PMI services finalized at 62.6, second strongest since 1997

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      ActionForex.com
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      UK PMI Services was finalized at 62.6 in March, up from February’s 60.5. Rate of expansion was the second strongest since May 1997, exceeded only by the post-lockdown recovery in May 2021. PMI composite was finalized at 60.9, up from prior months 59.9, fastest expansion since June 2021.

      Tim Moore, Economics Director at S&P Global: “UK economic growth continued to surge higher in March after an Omicron-induced slowdown at the turn of the year… However, the near-term growth outlook weakened in March, with optimism dropping to its lowest since October 2020 as the war in Ukraine and global inflation concerns took a considerable toll on business sentiment.

      “Service providers experienced the second-fastest rise in business expenses since this index began in 1996, driven by higher wages, energy bills and fuel prices. Soaring costs meant that output charges were increased to the greatest extent for more than 25 years in March. Many survey respondents commented that the full extent of the recent spike in their operating costs had yet to be passed on to customers.”

      Full release here.

      Fed Powell: The economic rebound, when it comes, can be robust

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        ActionForex.com
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        Fed Chair Jerome Powell said the central bank can contribute to fighting the coronavirus pandemic in important ways, “by providing a measure of relief and stability during this period of constrained economic activity, and by using our tools to ensure that the eventual recovery is as vigorous as possible.”

        “When the spread of the virus is under control, businesses will reopen, and people will come back to work”, he added. ” There is every reason to believe that the economic rebound, when it comes, can be robust.”

        Earlier in US session, Fed further ramped up its emergency actions by detailing the new USD 2.3T loan facilities to deliver credit to small businesses and municipalities. It also expanded measures introduced last month to back corporate debt markets.

        Eurozone Q1 GDP growth finalized at 0.4%, EU at 0.5%

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          ActionForex.com
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          Eurozone Q1 GDP growth was finalized at 0.4% qoq, unrevised. Over the year, Eurozone GDP grew 1.2% yoy. EU28 growth was finalized at 0.5% qoq, 1.5% yoy.

          Among Member States for which data are available for the first quarter of 2019, Croatia (1.8%) recorded the highest growth compared with the previous quarter, followed by Hungary and Poland (both 1.5%). A decrease was observed in Latvia (-0.1%).

          Quarterly, on the components, household final consumption expenditure rose by 0.5% in both the euro area and the EU28. Gross fixed capital formation increased by 1.1% in the euro area and by 1.3% in the EU28. Exports increased by 0.6% in the euro area and by 0.5% in the EU28. Imports increased by 0.4% in the euro area and 1.2% in the EU28.

          Full release here.

          Swiss CPI rose 0.4% mom, 0.6% yoy. No market reaction

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            ActionForex.com
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            Swiss CPI:

            • 0.4% mom vs exp 0.3% mom vs prior -0.1% mom
            • 0.6% yoy vs exp 0.6% yoy vs prior 0.7% yoy

            Quote from release

            “The 0.4% increase compared with the previous month can be explained by several factors including rising prices for air transport. Foreign package holidays also recorded an increase, as did clothing and footwear due to the end of the seasonal sales. In contrast, prices for heating oil, coffee and overnight stays in hotels decreased.”

            Full release: Consumer prices increased by 0.4% in February

            Comments: No impact on the markets, nor would it change SNB’s neutral stance

            ECB Lagarde noted signs on stabilization and mild increase in underlying inflation

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              ActionForex.com
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              ECB President Christine Lagarde said in the post-meeting press conference that incoming data pointed to “muted inflation pressures and weak euro area growth dynamics”. However, there were “some initial signs of stabilisation” in slowdown and a “mild increase” in underlying inflation. Job and wages growth continue to “underpin the resilience” of Eurozone economy too.

              There were some slight adjustments in the new Eurosystem staff macroeconomic projections. GDP growth are forecast to be at 1.2% in 2019 (revised up from Sep’s 1.1%), 1.1% in 2020 (revised down from 1.2%) and 1.4% in both 2021 (unchanged) and 2022. HICP inflation is projected to be at 1.2% in 2019 (unchanged), 1.1% in 2020 (revised up from 1.0%), 1.4% in 2021 (revised down from 1.5%) and 1.6% in 2022.

              Full introductory statement here.

              Germany’s ZEW economic sentiment surges to 9.8, suggesting bottoming out

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                ActionForex.com
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                Germany’s ZEW Economic Sentiment soared to 9.8 in November, far surpassing the anticipated 4.9, signaling increasing optimism among financial market experts. However, Current Situation Index barely moved, nudging from -79.9 to -79.8, and falling short of expected -75.5.

                Eurozone’s ZEW Economic Sentiment experienced a similar upswing, rising from 2.3 to 13.8, well ahead of the forecast of 6.1. Despite this, Current Situation Index in Eurozone showed a decline, dropping by -9.4 points to -61.8.

                Achim Wambach, ZEW President, noted that while current economic conditions are still challenging, there’s growing optimism. He added, “These observations support the impression that the economic development in Germany has bottomed out.”

                The increase in economic expectations is supported by a more positive view of the German industrial sector and both domestic and foreign stock markets. Additionally, “inflation and short- and long-term interest rates also appear to have reached turning points in expectations,” he added.

                Full German ZEW release here.

                Eurozone retail sales rose 1.0% mom in Nov, EU up 0.9% mom

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                  ActionForex.com
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                  Eurozone retail sales rose 1.0% mom in November, much better than expectation of -0.5%. Volume of retail trade increased by 1.6% for non-food products and by 0.6% for food, drinks and tobacco, while it fell by -1.5% for automotive fuels.

                  EU retail sales rose 0.9% mom. Among Member States for which data are available, the highest monthly increases in the total retail trade volume were registered in Spain (+4.9%), Luxembourg (+4.0%) and Portugal (+2.8%). The largest decreases were observed in Austria (-4.1%), Latvia (-3.6%) and Croatia (-3.1%).

                  Full release here.

                  Eurozone PMIs: Growth has downshifted markedly since the peak at the start of the year

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                    ActionForex.com
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                    Eurozone PMI manufacturing dropped to 56.0 in April, down from 56.6, miss expectation of 56.1. Eurozone PMI services rose to 55.0, up from 54.9 and beat expectation of 54.6. PMI composite unchanged at 55.2.

                    Comments from Chris Williamson, Chief Business Economist at IHS Markit:

                    “The Eurozone economy remained stuck in a lower gear in April, with business activity expanding at a rate unchanged on March, which had in turn been the slowest since the start of 2017. Growth has downshifted markedly since the peak at the start of the year, but importantly still remains robust.

                    “The April data are running at a level broadly consistent with Eurozone GDP growth of approximately 0.6% at the start of the second quarter.

                    “The decline in the PMI from January’s high is neither surprising nor alarming: such strong growth as that seen at the start of the year rarely persists for long, not least because supply fails to keep up with demand. With recent months seeing record delivery delays for inputs to factories and growing skill shortages, output is clearly being constrained. In France, strikes were also reported to have disrupted growth, and may continue to do so in coming months

                    “However, it’s also clear that underlying demand has weakened, in part due to exports being hit by the stronger euro. With companies’ future optimism having slipped to the lowest since last year, it looks likely that growth may well slow further in coming months.”

                    New Zealand ANZ business confidence rose to 7, inflation expectations surged

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                      ActionForex.com
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                      Preliminary reading of New Zealand ANZ business confidence improved to 7.0 in May, up from -2.0. Own activity outlook also rose to 32.3, up from 22.2. Export intentions rose to 14.9, from 9.1. Investment intentions rose to 20.8, from 17.1. Employment intentions rose to 22.1, from 16.4. Pricing intentions rose to 57.6, from 55.8. Inflation expectations surged to 2.17, from 1.97.

                      ANZ said: “Any ECON 101 student or business person can tell you that strong demand and hampered supply is a sure-fire recipe for inflation. The RBNZ can ignore it only as long as inflation expectations remain well-anchored. So far so good; but it’s a lagging, not leading, indicator.”

                      Full release here.

                      Bank of Spain slashes 2019 growth forecasts to 2% on weak investment and consumption

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                        ActionForex.com
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                        Bank of Spain lowered 2019 growth forecasts to 2.0%, sharply lower than June’s projection of 2.4%. For 2020, growth projection was downgraded to 1.7%, from 1.9%. For 2021, growth forecast was also downgraded to 1.6%, from 1.7%. Weaker investment and private consumption were the main factor for the downgrades.

                        Meanwhile, the central bank also noted risks including European slowdown, Brexit, US-China trade tension as well as domestic political uncertainties. Spain is going to have the fourth parliamentary elections in four years on November 10.

                        Oscar Arce, the Bank of Spain’s director general for economics, statistics and research said, “Also worth mentioning as a possible risk element is the continuation of uncertainty on the domestic front about the course of main economic policies in this country in the future.”

                        Eurozone Q4 GDP growth finalized at 0.3% qoq, EU at 0.5% qoq

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                          ActionForex.com
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                          Eurozone Q4 GDP growth was finalized at 0.3% qoq while employment grew 0.5% qoq. For 2021 as a whole, GDP grew 5.3%. GDP was 0.2% above pre-pandemic level in Q4 2019.

                          EU Q4 GDP growth was finalized at 0.4% qoq while employment grew 0.5% qoq. For 2021 as a whole, GDP grew 5.3%. GDP was 0.6% above pre-pandemic level in Q4 2019.

                          GDP growth by Member State: Slovenia (+5.4%) recorded the highest increase of GDP compared to the previous quarter, followed by Malta (+2.3%), Spain and Hungary (both +2.0%). Decreases were observed in Ireland (-5.4%), Austria (-1.5%), Germany (-0.3%), Croatia, Latvia and Romania (all -0.1%).

                          Full release here.

                          Fed minutes show majority leaning towards further rate hike

                            By
                            Federal Reserve
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                            In the minutes from Fed’s September 19-20 meeting, while “a majority of participants” believed another rate increase might be in order, a contrasting view was held by “some” who deemed no further hikes necessary.

                            A unanimous consensus was evident among all attendees that the existing policy stance needs to “remain restrictive for some time”. The chief rationale behind this unified sentiment is to ensure that inflation trends downwards in a sustained manner to Fed’s target.

                            An interesting shift in communication strategy was proposed by “several participants”. They emphasized that discussions and subsequent messaging should transition from deliberating the potential height of rate hikes to determining the duration for which rates should be maintained at these elevated, restrictive levels.

                            In terms of gauging risks, participants “generally judged” that challenges to fulfilling the Fed’s mandates had become “more two sided”. However, a lingering concern persists. Despite this balanced view of risks, “most participants” continued to see upside risks to inflation.

                            Full FOMC minutes here.

                            EU warns risk of no-deal Brexit is very real

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                              ActionForex.com
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                              European Commission President Jean-Claude Juncker warned that there is very little time left and the risk of no-deal Brexit is “very real”. He added he’s “not emotionally attacked to the Irish backstop” and he has asked UK Prime Minister Boris Johnson “to make, in writing, alternatives”.

                              EU’s chief Brexit negotiator Michel Barnier also urged “everyone not to underestimate the consequences, clearly for the United Kingdom first of all but also for us, of the absence of a deal.” He also emphasized that the issue of Irish border was a precursor to an agreement. And, “if the United Kingdom leaves without a deal, I want to remind you that all these questions will not just disappear… Some three years after the Brexit referendum we should not be pretending to negotiate.”

                              ISM manufacturing dropped to 57.7, employment dropped to 56.8

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                                ActionForex.com
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                                US ISM manufacturing index dropped to 57.7 in October, down from 59.8 and missed expectation of 59.0. That’s the lowest level since April this year. Price paid component rose to 71.6, up from 66.9 and beat expectation of 67.5 Employment component dropped to 56.8, down from 58.8.

                                From Timothy R. Fiore Chair ISM Manufacturing Business Survey Committee:

                                • Comments from the panel reflect continued expanding business strength.
                                • Demand remains moderately strong, with the New Orders Index easing to below 60 percent for the first time since April 2017, the Customers’ Inventories Index remaining low but improving, and the Backlog of Orders Index remaining steady.
                                • Consumption softened, with production and employment continuing to expand, but at lower levels compared to September. I
                                • Inputs — expressed as supplier deliveries (increased), inventories and imports — retained September’s levels. Continued supply chain delivery difficulties led to an increased consumption of inventory, and import expansion was stable. Lead-time extensions continue, while steel and aluminum prices are stabilizing. Supplier labor issues and transportation difficulties continue to disrupt production, but at more manageable levels.
                                • The expansion of new export orders softened, but five of six major industries contributed, up from two in September. Prices pressure continues, with the index returning above 70 percent. Overall, the manufacturing community continues to expand, but at the lowest level since April 2018.

                                Quotes from respondents:

                                • “Tariffs are causing inflation: increased costs of imports, increased cost of freight and increased domestic costs from suppliers who import.” (Chemical Products)
                                • “Protein prices continue under pressure from heavy U.S. supplies and export concerns related to trade tariffs. Higher costs related to trade tariffs are starting to be passed on to the cost of goods sold.” (Food, Beverage & Tobacco Products)
                                • “NAFTA 2.0/USMCA does nothing to help our company, as it does not address Section 232 tariffs.” (Plastics & Rubber Products)
                                • “Mounting pressure due to pending tariffs. Bracing for delays in material from China — a rush of orders trying to race tariff implementation is flooding shipping and customs.” (Miscellaneous Manufacturing)
                                • “Steel tariffs continue to negatively affect our cost, even though we utilize U.S. sources for steel. Oil prices put meaningful upward pressure on cost. Continued tightness with truck drivers is expected.” (Petroleum & Coal Products)

                                Full release here.

                                BoC Beaudry: Interest rate may need to go above 3%

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                                  ActionForex.com
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                                  BoC Deputy Governor Paul Beaudry said in a speech, “we noted that price pressures are broadening and inflation is much higher than we expected and likely to go higher still before easing.”

                                  “This raises the likelihood that we may need to raise the policy rate to the top end or above the neutral range to bring demand and supply into balance and keep inflation expectations well anchored,” he added.

                                  Beaudry also indicated that the neutral range, a rate that “neither stimulates nor weighs on growth”, is estimated to be “between 2% and 3%”

                                  Full speech here.

                                  Eurozone CPI finalized at 8.1% yoy in may, core CPI at 3.8% yoy

                                    By
                                    ActionForex.com
                                    -

                                    Eurozone CPI was finalized at 8.1% yoy in May, up from April’s 7.4% yoy. All-items excluding energy rose from 4.1% yoy to 4.6% yoy. All-item excluding energy, food, alcohol and tobacco rose from 3.5% yoy to 3.8% yoy. Energy prices accelerated from 37.5% yoy to 39.1% yoy. Food, alcohol and tobacco prices accelerated from 6.3% yoy to 7.5% yoy.

                                    EU CPI was finalized at 8.8% yoy, up from April’s 8.1% yoy. The lowest annual rates were registered in France, Malta (both 5.8%) and Finland (7.1%). The highest annual rates were recorded in Estonia (20.1%), Lithuania (18.5%) and Latvia (16.8%). Compared with April, annual inflation fell in one Member State and rose in twenty-six.

                                    Full release here.

                                    Japan business conditions deteriorated sharply in Q1, no material improvement expected in Q2

                                      By
                                      ActionForex.com
                                      -

                                      According to the Ministry of Finance’s latest survey, business conditions in Japan deteriorated drastically in Q1. The Large manufacturing business survey index (BSI) tumbled from 21.6 to 1.6. Large non-manufacturing BSI turned negative from 6.7 to -7.4. Large all industries BSI also turned negative from 11.6 to -4.5.

                                      Outlook is for Q2 is not expected to improve much, with large manufacturing, large non-manufacturing and large all industries at 2.5. Some improvements could be seen in Q3, with large manufacturing outlook at 9.3, but still way off Q4’s number. Large non-manufacturing Q3 outlook rose to 6.0. Large all industries Q3 outlook rose to 7.1.

                                      Full release here.

                                      Fed Williams: Monetary policy is where it should be

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                                        ActionForex.com
                                        -

                                        New York Fed President John Williams said in a Reuters interview that he’s comfortable with the current interest rate level. He described the current federal funds rate, at 2.25-2.50%, as being “around my view of what neutral interest rates are”. And “monetary policy is where it should be”.

                                        He noted that a shift in economic outlook is needed for Fed to resume the rate hike cycle. Nevertheless, he added “I don’t think that it would take a big change, but it would be a different outlook either for growth or inflation”.

                                        Regarding balance sheet reduction, Williams noted it could end when bank reserves hit “maybe $1 trillion of reserves or somewhat more than that”. That’s only around USD 600B below current levels. He added, the figure is “a guess today of the amount of reserves that will be held in the system in the future – but again we are learning and will get a finer touch on that.”

                                        China’s PMI services rose to 51.5 in Nov, composite rose to 51.6

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                                          ActionForex.com
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                                          China’s Caixin PMI Services rose from 50.4 to 51.5 in November, above expectation of 50.8. PMI Composite rose from 50.0 to 51.6.

                                          Wang Zhe, Senior Economist at Caixin Insight Group said: “Overall, the macroeconomy showed signs of a positive recovery, with steady growth in consumer spending, solid progress in industrial production and improved market expectations.

                                          “However, due to various unfavorable factors, both domestic and external demand still face challenges and employment pressures remain relatively high. The foundation for economic recovery needs to be further consolidated.”

                                          Full China Caixin PMI Services release here.

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