Macroeconomics: The Day Ahead for 26 April

A busy day to end the week, as the BoJ policy meeting and forecasts updates are digested, along with Tokyo JPI, UK GfK Consumer Confidence and Spanish quarterly Unemployment. Ahead lie Eurozone M3 and Private Sector Credit, Brazil’s IPCA-15 inflation, and most significantly US Personal Income & PCE, final Michigan Sentiment and KC Fed Services survey. Another busy for corporate earnings worldwide, but the rash of ‘big oil’ company results including Chevron, ExxonMobil, Imperial Oil, Phillips 66 and Total Energies are likely to steal the show, though Citic Securities, Colgate-Palmolive, HCA Healthcare, LyondellBasell Industries, NatWest and Pioneer Natural Resources will try and muscle in on the spotlight. There is a reasonable flow of ECB speakers and the ECB publishes its Inflation Expectations survey, while Russian rates are expected to be held at 16.0%.  Next week brings a good deals of event risk with the FOMC meeting front and centre, above all the messaging on the rate outlook, and US statistical terms there are the usual gamut of labour market indicators (JOLTS, ADP, Payrolls and Average Hourly Earnings), Consumer Confidence, Auto Sales, ISM surveys and House Prices. China awaits NBS PMIs, while the Eurozone focuses on provisional April CPI and advance Q1 GDP prints, German Unemployment and French Consumer Spending, while the UK has Consumer Credit, Mortgage lending and BRC Shop Prices. Japan looks to Industrial Production, Retail Sales and Unemployment, and Canada has monthly GDP and Trade. The mid-week May Day bank holiday in many countries will disrupt trading volumes, and also see Chinese markets closed from Wednesday through Friday.

** U.S.A. – March Personal Income/PCE **
Yesterday’s advance Q1 GDP was a lot weaker than expected in headline terms, thanks to the combined drag from Net Exports (-0.86 ppt) and Inventories (-0.35), with much weaker govt spending (surprisingly including defence), but overall Final Sales to Domestic Buyers rose at a robust 2.8%, albeit down from Q4’s 3.5%. But more pertinently ahead of today’s PCE data, Personal Consumption was somewhat weaker than expected, mostly due to Autos, and the core PCE Deflator at 3.7%, the latter prompting some upward revisions to today’s monthly data from the originally anticipated 0.3% m/m to 0.4%, and therefore likely to see the y/y holding at 2.8% against prior forecasts of a 0.1 ppt dip to 2.7%, and by extension reinforcing Fed caution on rate cuts. But as the attached chart of headline and core deflators attests, perspective is needed, inflation is easing, just not as quickly as the Fed had assumed and was hoping. It will be interesting to note whether Powell focuses more on headline growth or the overall strength of domestic demand, particularly as the drag from Net Exports was all about the strength of Imports rather than weakness in Exports.