Macroeconomics: The Day Ahead for 19 April

The Israeli missile attack on Iran overrides the rest of the day’s schedule, though for the time being it would appear that this is another choreographed move, to which Iran for the time being is not going to respond immediately, but still serving as a reminder that complacency about the level of tensions in the Middle East would be very much misplaced. It is in any case a rather subdued end to the week in data and event terms, with Japan’s national CPI, UK Retail Sales and German PPI to digest, and no further significant statistical items on the rest of the day’s agenda. In event terms, India’s seven week long general election gets under way, with the primary question being how large a majority PM Modi’s BJP can secure, even though the top concerns for voters are unemployment and inflation, which is somewhat ironic given the strength of India’s economy. There is a further smattering of central bank speakers, while American Express and Schlumbeger head the run of US corporate earnings. Next week’s schedule is relatively light in statistical terms, featuring the run of G7 and India PMIs, Germany’s IFo and a raft of other surveys, above all in the Eurozone and UK, with the US looking to Q1 advance GDP, Personal Income/PCE and Durable Goods Orders, as Japan and Australia await CPI. The Q1 earnings season cranks up to full speed, above all in the US with likes of Alphabet, Boeing, Caterpillar, Chevron, Colgate-Palmolive, ExxonMobil, Ford, GM, Microsoft, Meta, Tesla and UPS among the highlights. The BoJ meets, with no change in policy expected, but a lot of interest in its forecast update.

** U.K. – Retail Sales **

If a reminder was needed that one slightly higher than expected, but still falling set of CPI data was unlikely to prompt a Fed style volte face on the MPC’s rate cut trajectory, then the weaker than expected flat m/m reading, and a drop of -0.3% m/m ex-Auto Fuel underlines that UK consumers remain rather cautious. It was perhaps all the more disappointing given that the early timing of Easter should by rights have given a modest boost, though the wet March weather doubtless also weighed on sales. Weakness was concentrated in Food (-0.7% m/m), Dept stores (-3.8%) and Non-store (i.e. internet) Retailing (-1.5%), but offset by strength in Household Goods (2.4 m/m) and Auto Fuel (3.2%). It will be interesting to see if the near 10% rise in the National Living Wage as of April, and the cut in the household energy price cap gives a boost to this month’s report.