With some “serious” fund managers recently allocating to Crypto assets (please don’t make me say it), a review of their rationales and CitiWire mea-culpa’s should be expected, served with a garnish of Schadenfreude from the non-believers.
This noise washed out a most important signal – taper – from the FOMC! The minutes noted “talking about talking” was likely at the next few meetings, despite Chair Powell asserting he wasn’t even “thinking about thinking” about starting such a discussion at the last press conference.
Canadian CPI followed the lead from south of the border with a surprise uptick to +0.5% MoM (0.2% exp., 0.5% prev.) and +3.4% YoY (3.2% exp., 2.2% prev.) The more stable measures, which the central bank focuses on, were much more muted however, with the trimmed mean printing +2.3% YoY (2.2% exp., 2.2% prev.) Core retail sales was strong at +4.3% MoM (2.3% exp., 4.8% prev.)
The FOMC Minutes were this week’s big reveal – they talked about talking, about taper… The Philadelphia Fed outlook dropped, unexpectedly, to +31.5 (41.5 exp., 50.2 prev.) PMIs were unambiguously strong.
Eurozone wide PMIs as well as French PMIs were stronger. German PMIs were mixed but remained expansionary.
Japanese data reflected the increase in lockdown restrictions over the previous months. 1Q GDP printed weaker at -1.3% QoQ (-1.1% exp., 2.8% prev.) Core CPI was also weaker -0.2% (-0.1% exp., 0.3% prev.) PMIs were weaker with the composite slipping into the contractionary zone. Core machinery orders were also weaker.
The economy is reopening, and the data supports this view. All unemployment and employment measures improved. PMIs were expansionary and mostly stronger. Core retail sales were exceptionally strong at +9.0% MoM (4.4% exp., 4.9% prev.) and +37.7% YoY (31.7% exp., 7.9% prev.)
Economists are often criticised for having 2 answers to every question. UK inflation is no different. CPI which, despite volatility elsewhere, was particularly benign printing +0.6% MoM (0.6% exp., 0.3% prev.) and +1.5% YoY (1.5% exp., 0.7% prev.). With even the core measure failing to surprise at +1.3% YoY (1.3% exp., 1.1% prev.) The surprise was left to RPI, which is a measure exclusive to the UK, printing +1.4% MoM (0.8% exp., 0.3% prev.) and +2.9% YoY (2.4% exp., 1.5% prev.) And RPIx 3.2% YoY (2.7% exp., 1.6% prev.) This difference in inflation measures was driven by “the basket” – the types of goods and their mathematically assigned relative importance. So, now you can point to there being surprise inflation (RPI) and normal inflation (CPI) at the same time, whilst doffing your hat to the economic community for their foresight and clarity.
Wages were a little stronger at +0.6% QoQ (0.5% exp., 0.6% prev.) and +1.5% YoY (1.4% exp., 1.4% prev.) However, employment was lower at -30.6k (20.0k exp., 70.7k prev.) and the underlying picture quite confused. The unemployment rate did drop to +5.5% (5.6% exp., 5.6% prev.) but this was mostly driven by a large drop in the participation rate 66.0% (66.3% exp., 66.3% prev.)
Consumer inflation expectation moved higher, and retail sales were strong +1.1% MoM (0.5% exp., 1.3% prev.). PMIs were expansionary, but mixed.