Market movers today
Euro area retail sales for March released today. Following solid monthly increases in both January (0.1%) and February (0.7%) we expect a marginal monthly decline of 0.1% in March.
The important PMI services index for UK is due today and we expect it to be more or less unchanged at 55.0, as suggested by the services confidence indicator.
Following the final TV debate in the French election yesterday, the market will monitor incoming polls to see if it has impacted Macron’s strong lead ahead of the second round of the election on Sunday.
We do not expect any new signals from Norges Bank today. It is not long since the previous meeting in March, which included a monetary policy report with updated interest rate projections. Although the bank cont inued to signal a significant chance of a further rate cut, there is lit t le to suggest that the probability has increased since the March meeting.
Selected market news
The Chinese Caixin service PMI fell to 51.5 in April from 52.2 in March thus mirroring the fall in the manufacturing PMI released on Monday. Consequent ly, the composite PMI dropped to 51.2 from 52.1. The data shows that the weaker growth seen in China has hit across both the service and manufacturing sectors.
As expect ed, the Fed’s May meeting did not provide substant ial new information. The Fed funds target range was maintained at 0.75-1.00% and there were no changes to the reinvestment policy. Most interestingly is that the Fed thinks the weak GDP growth of 0.7% q/q AR in Q1 was ‘likely to be transitory’. The Fed st ill expect s growth to cont inue at a moderate pace leading to further labour market tightening and stabilising inflation around 2%. Near-term risks to the economic out look st ill appears ‘roughly balanced’.
63% of the viewers of the final TV debate in the French election yesterday thought Macron was more convincing. Hence, the final debate is unlikely to have significant ly impacted the st rong lead he has enjoyed in opinion polls.
UK’s Prime Minist er May, yest erday lashed out at EU officials saying they have issued t hreats against the UK and that the EU negot iating stance has hardened. She added that recent leaks have been deliberately timed to affect election results. Finally, she reiterated that no deal with the EU is bet ter than a bad one.
EIA crude data showed a decline in US crude stocks last week of 900kb last week – a lower figure than the API crude data from Tuesday, which showed a 4.2mb decline. On top of this, the estimate for crude production showed a further rise in crude production last week. The release added to bearish sentiment in the oil market and triggered an immediate negat ive reaction in the oil price.
