With CPI, PPI PMIs and several G10 central bank meetings, there was certainly potential for volatility. However, CPI, PPI were benign across almost all countries and whilst PMIs showed strength in countries exiting lockdown, there were no large increases. Market volatility was disappointingly quiet, again depressed by a benign Fed.
Chinese PMIs printed at expansionary levels and Asian manufacturing nations printed stabilising but at strong levels of trade.
The Canadian federal government release 2021 budget with a C$34bln increase in this year’s deficit and an extra C$100bln of spending over the 3 years. The federal debt to GDP ration is now expected to peak at 51% this year, which sounds reasonable, but the measure does exclude provincial level issuance.
The Mar trimmed mean CPI 2.2% YoY% (2.0% exp., 1.9% prev.), roughly in line with the BoC’s target. This jump had been expected as energy prices revert to more usual levels. The BoC met and kept policy rates unchanged but tapered their bond purchase program to C$3lbn per month, from C$4bln. The policy shift was the result of an upgraded outlook with the output gap – a measure of economic slack – disappearing in 2022H2, roughly 6 months earlier than they had previously thought. Core Feb retail sales were strong at +4.8% MoM (3.5% exp., -1.2% prev.)
The FOMC left policy unchanged with Chair Powell pushing back on all questions surrounding tapering. PMIs were better than expectations and consumer confidence picked up.
1Q GDP was roughly in line with expectations +6.4% QoQ (6.7% exp., 4.3% prev.) and Core PCE Deflator +0.4% MoM (0.3% exp., 0.1% prev.) and +1.8% YoY (1.8% exp., 1.4% prev.)
U. of Mich. expectations increased modestly, and short-term Inflation expectations moderated +3.4% (3.7% prev.) with longer term expectations stable at +2.7% (2.7% prev.)
The ECB met and policy rates were unchanged. It is unlikely that we will write a different statement with reference to the ECB for a considerable period. PMIs were expansionary and in line with an opening economy. Mar unemployment dropped to +8.1% (8.3% exp., 8.3% prev.) and Apr core CPI was steady at +0.8% YoY (0.8% exp., 0.9% prev.). Advanced GDP was contractionary, but a touch better than expectations.
French PMIs were very slightly contractionary with services dragging down a very buoyant manufacturing number. GDP was expansionary and beat expectations at +0.4% QoQ (0.0% exp., -1.4% prev.) and 1.5% YoY (1.0% exp., -4.9% prev.) Apr CPI harmonized +0.3% MoM (0.1% exp., 0.7% prev.) +1.7% YoY (1.6% exp., 1.4% prev.)
German PMIs were very strong but the IFO survey was weaker. Apr unemployment rate was steady +6.0% (6.0% exp., 6.0% prev.). Apr harmonized CPI was strong at +0.5% MoM (0.4% exp., 0.5% prev.) and +2.1% YoY (2.0% exp., 2.0% prev.) and 1Q GDP was a little worse -1.7% QoQ (-1.5% exp., 0.3% prev.) -3.0% YoY (-3.2% exp., -3.7% prev.)
Italian confidence was higher, the unemployment rate was lower, at +10.1% (10.3% exp., 10.2% prev.) 1Q GDP slightly beat expectations slightly -0.4% QoQ (-0.5% exp., -1.9% prev.) and -1.4% YoY (-1.6% exp., -6.6% prev.). Apr harmonized CPI printed +0.9% MoM (0.8% exp., 1.8% prev.) and +1.0% YoY (0.9% exp., 0.6% prev.)
Sweden’s central bank did not move its policy rates and left its “envelope” (total QE) unchanged at SK700bln and reminded the market that QE will slow in Q3 as purchases were front loaded into Q1. The outlook was for policy was unchanged, despite the Riksbank upgrading its growth and inflation forecasts with any overshoot in realised inflation seen as helpful in anchoring inflation expectations at the 2% level. Mar retail sales +2.6% MoM (0.2% exp., 0.7% prev.), +9.1% YoY (4.6% prev.) and 1Q GDP +1.1% QoQ (0.5% exp., 0.5% prev.), 0.0% YoY (-1.4% exp., -2.6% prev.) were both very strong.
Norwegian Mar core retail sales +0.0% MoM (0.6% exp., -0.3% prev.) and the unemployment rate dropped to a healthy +4.0% (4.1% exp., 4.2% prev.)
Mar core CPI was at least positive +0.3% YoY (0.3% exp., 0.2% prev.) but very lower in comparison to other G10 YoY numbers. The BoJ tacitly acknowledged this with its latest forecasts not reaching target for the rest of the Governor’s term. Unsurprisingly, they left policy unchanged at their April meeting.
PMIs were slightly stronger and Mar retail sales were much stronger at +1.2% MoM (0.6% exp., 3.1% prev.) and YoY 5.2% (4.7% exp., -1.5% prev.) The Mar Jobless Rate dropped +2.6% (2.9% exp., 2.9% prev.) and the Job-To-Applicant Ratio 1.1 (1.09 exp., 1.09 prev.). Industrial production was strong at +2.2% MoM (-2.0% exp., -1.3% prev.) and +4.0% YoY (-0.6% exp., -2.0% prev.)
PMIs were all slightly stronger, the Feb unemployment rate dropped to 4.9% (5.0% exp., 5.0% prev.) and Mar core CPI +1.1% YoY (1.1% exp., 0.9% prev.) with RPIx at +1.6% YoY (1.8% exp., 1.6% prev.) Mar core retail sales bounced to +4.9% MoM (2.0% exp., 2.4% prev.) and +7.9% YoY (4.5% exp., -1.1% prev.).
1Q trimmed mean CPI +0.3% QoQ (0.5% exp., 0.4% prev.) and 1.1% YoY (1.2% exp., 1.2% prev.) and was responsible for ushering in a mood of inflation despondency. Market participants subsequently factoring in softer than forecast inflation prints globally. PMIs were stronger and retail sales beat expectations at +1.4% MoM (1.0% exp., -0.8% prev.)
1Q CPI met expectations at +0.8% QoQ (0.8% exp., 0.5% prev.) but with printing at +1.5% YoY (1.5% exp., 1.4% prev.) did nothing to inspire confidence in a globally higher level of inflation from exciting lockdowns going forwards. Mar Credit Card Spending +3.1% MoM (-1.9% prev.) +2.2% YoY (-12.4% prev.)