Macroeconomics: The Day Ahead for 16 April

As the Easter holiday approaches, a cautious and tentative calm appears to be getting some traction in markets, even if one might rightly question whether the series of rollbacks on various US administration tariff measures are really cause for anything more than temporary, though welcome relief for traders and investors. But they remain an ever present threat, though there is a busy run of major data today, with China’s Q1 GDP, monthly activity and property indicators, along with UK CPI & RPI to digest ahead of final Eurozone CPI, US Retail Sales, Industrial Production, NAHB Housing Index, Business Inventories and TIC Portfolio Flows. Powell heads the run of Fed speakers, and the Bank of Canada delivers its latest decision, while there are earnings reports from ASML, Heineken and Alcoa, along with Q1 production reports from Rio Tinto and Antofagasta. Throw in an updated set of global trade forecasts from the WTO (clearly nothing more than guesstimates, but likely to garner attention, and government bond auctions in the UK, Germany and the US, and the day’s agenda is a busy one.

** China – Q1 GDP, Activity & Property Indicators **

– Overall the run of activity data was somewhat better than expected, but in the face of the brutal tariff wars with the US will do little or nothing to assuage concerns about the outlook. Q1 GDP was both better and worse than expected, with q/q growth slowing to 1.2% vs. expected 1.4% and prior 1.6%, though y/y accelerating to 5.4% vs. expected 5.2%. The more encouraging part was the acceleration in monthly indicators, above all the jump in Retail Sales to 5.9% y/y and 4.6% y.t.d. vs. forecasts of 4.3%, while Industrial Production surged to 7.7% y/y and 6.5% y..t.d. vs. expected 5.9%, more than likely reflecting some restocking of finished inventories after the surge in exports. Fixed Asset Investments were broadly in line with forecasts, edging up to 4.2% vs. forecast/prior 4.1%, with ongoing weakness in Property Investment, little changed at -9.9% y.t.d., continuing to act as the primary drag. Accompanying data on Home Prices remained negative, despite smaller declines in both new (-0.8% m/m) and Existing (-0.23% m/m) prices. Anecdotal evidence (e.g. https://www.cnbc.com/2025/04/14/tariffs-wont-bring-manufacturing-back-to-us-supply-chain-survey.html  and https://www.cnbc.com/2025/04/14/tariffs-wont-bring-manufacturing-back-to-us-supply-chain-survey.html and high frequency data pointing to a very sharp slowdown in April, and as yet little sign of either the US or China backing down or opening the door to meaningful trade negotiations.

** U.K. – March CPI **

– Today’s CPI is something of a holding report given the sharp increases in Utility bills, Council Tax and other administered prices at the start of April, and in any case unlikely to stir much reaction if forecasts of a 0.4% m/m rise in headline that would see the y/y rate dip 0.1 ppt to 2.7% are correct, with core and Services also seen dipping to 3.4% y/y and 4.8% y/y respectively.

** U.S.A. – Retail Sales, Industrial Production & NAHB Housing Market Index **

– Headline Retail Sales should get a big boost from the jump in Auto Sales, with the consensus looking for 1.4% m/m, while ex-Autos sales are seen up 0.4% m/m, and the core ‘Control Group’ measure 0.6% m/m, boosted by some bigger ticket goods spending, also trying to beat tariffs, though restaurant sales may prove to be weak, and therefore imply a sharp drop in Q1 Personal Consumption GDP to 1.0% or less vs. 4.0% in Q4. Weak Manufacturing surveys and lower oil sector output predicate a forecast of -0.2% m/m in Industrial Production, with Manufacturing Output seen up 0.3% after a jump of 0.9% m/m in February, while the NAHB Housing Market Index is forecast to edge down 1 pt to 38.  Expect a good deal of unusual attention to the TIC Portfolio Flows data, above all to China’s holdings of Treasuries, though beware the potential for a lot of hyperbole about whether or not China is ‘dumping’ Treasuries in response to US tariffs.

** Canada – BoC rate decision **

– Yesterday’s below forecast CPI data (0.3% m/m 2.3% y/y vs. expected 0.7% m/m 2.7%) saw a substantial drag from discretionary items (furniture, recreation and transport), which offset much of the upward pressure from the end of the sales tax holiday in mid-February, though core measures were close to forecasts at 2.8% and 2.9% y/y respectively. The consensus still looks for a no change (2.75%) decision, though there remains a very sizeable minority looking for a further 25 bps cut. The CPI data cut both ways, on the one hand showing sufficient weakness in discretionary spending to justify a further cut, while on the other hand still leaving core CPI far enough above the BoC’s 2.0% target and recent lows to make the case for a more cautious approach, perhaps all the more so given the proximity of the national elections on April 28.