FOMC meeting will highlight a busy calendar

April 25, 2016

Main Macro Events This Week

United States: The FOMC meeting (Tuesday, Wednesday) will highlight a busy calendar, even though the Fed is universally expected to remain on hold. Economic reports will play second fiddle to the policy meeting. First up is March new home sales (Monday), which is seen rising 1.6% to a 520k pace from 512k in February, along with the Dallas Fed index set to rebound to -8.0 in April from -13.6. Durable goods orders are forecast to rebound 1.0% in March (Tuesday) from a 3.0 % dive, but seen flat ex-autos. S&P/Case-Shiller home prices may dip 0.3% to 182.0 in February from 182.6, while Markit flash PMI services index is also due (Tuesday), along with consumer confidence set to slip to 95.5 (median 95.8) in April from 96.2 given weakness in U. Michigan sentiment and market volatility. Richmond Fed index may plunge to 7.0 in April from 22.0. MBA mortgage market index kicks off (Wednesday), followed by the March trade deficit expected to hold near -$62.8 bln (median -$63.0 bln) vs -$62.9 bln. NAR pending home sales are also on tap, along with EIA energy inventories. The first release of Q1 GDP (Thursday) is set to shrink to 0.3% (median 0.7%) from 1.4% in Q4, with risk to the downside from a huge inventory unwind. Initial jobless claims (Thursday) may hold at a very low 247k (median 255k) for the week ended April 23, after marking the lowest reading since November 1973. The ECI for Q1 is forecast to rise 0.6% (Friday) vs 0.6% in Q4 for a still tame 1.9% y/y, while personal income (Friday) may rise 0.3% in March and spending rise 0.2%, along with tame 0.1% PCE prices. Chicago PMI (Friday) is projected to hold at 53.0 in April vs 53.6 and final consumer sentiment from the University of Michigan survey (Friday) will be measured against a 89.7 preliminary reading (median 90.0).

Canada: The Bank of Canada Governor Poloz’s appearance will garner attention early in the week while February GDP will be the focus at the end of the week. GDP (Friday) is expected to fall 0.2% in February after the 0.6% surge in January. The industrial product price index (Friday) is seen rising 0.5% m/m after the 1.1% drop in February, as firmer gasoline and commodity prices more than offset the damping effect of a stronger Loonie relative to the U.S. dollar. Average weekly earnings (Thursday) are seen rising 0.2% m/m in February after the 0.3% gain in January. Canada’s compensation cost growth backdrop remains tame. Governor Poloz (Tuesday) speaks to the Investment Industry Association of Canada and Securities Industry and Financial Markets Association New York.

Europe:  It’s a busy calendar, with the second round of confidence indicators for April as well as preliminary inflation data for April in focus. The week starts with the German Ifo Business Climate for April where we are looking for a slight improvement after the better than expected ZEW and manufacturing PMIs. Similarly, the Eurozone ESI Economic Confidence indicator (Thursday) is expected to nudge higher to 103.2 (median 103.4) from 103.0 in the previous month. France and Spain will be the first countries to release Q1 GDP numbers onFriday and we are expecting a steady quarterly growth rate of 0.3% for France and a slight slowdown to a still strong 0.7% for the Spanish. We are looking for a slight uptick in the German jobless number (Thursday) for April of 4K, which should leave the jobless rate at a low 6.2% (medians same). Overall Eurozone unemployment (Friday) meanwhile is seen steady at 10.3% (median same) in March, with cross country divergence remaining high, especially among the under 25s. Preliminary inflation data meanwhile could well see another dip in headline rates, with the Easter effect and oil prices the main driving factor. German HICP (Thursday), falling back to 0.0% y/y (median 0.1%) from 0.1% y/y and the French HICP (Friday) declining to -0.2% y/y, which would see the overall EMU CPI number (Friday), falling to -0.1% y/y (median 0.0%) from 0.0% y/y in the previous month.

UK: Also a very busy calendar, with Brexit still dominating the headlines, there is only 44% support for the UK remaining in the EU according to the latest update of the FT’s Brexit poll tracker, versus 42% in favour of leaving. April CBI industrial trends survey (Monday), BBA mortgage approvals (Tuesday), the first estimate of Q1 GDP (Wednesday), the April CBI wholesale and retail sales survey (also Wednesday), the April Gfk consumer confidence report (Thursday), and, rounding out the week, March BoE data on lending (Friday).

China: There are no scheduled economic releases this week.

Japan: The BoJ meeting (Wednesday, Thursday) will be the highlight, as speculation has grown that the Bank will, if not delve further into negative rate territory, then at least step up its buying of equity ETFs. Speculation is that should the FOMC announcement (Wednesday) remain tilted to the dovish side, the BoJ is more likely to act forcefully. The calendar is very full this week. Monday brings March services PPI, which is expected to rise to 0.3% y/y from the prior 0.2%. Revised February leading and coincident indices are also due. The February all-industry index (Wednesday) is seen up 1.5% m/m from up 2.0% in January. Thursday brings the lion’s share of data (due to Friday’s holiday), including March national CPI, where overall prices are seen up 0.1% y/y versus the February 0.3% outcome. On a core basis, we look for a -0.1% y/y outcome, as compared to unchanged last month. Tokyo April CPI is expected unchanged y/y overall versus -0.1% previously, and down 0.1% y/y from -0.3% on a core basis. March unemployment is forecast unchanged at 3.3%, with the offers to seekers ratio steady at 1.28. March personal income and PCE are due, with consumption expected to fall 4.0% y/y from the 1.2% previous gain. March industrial production should improve to up 1.0% y/y from the -5.2% slide seen in February. March retail sales are penciled in at up 1.0% y/y from the 2.2% prior gain for large retailers, and town 1.0% y/y from the 0.4% rise overall. March housing starts and construction orders are also due.

Australia: Reserve Bank of Australia Assistant Governor (Financial Markets) Debelle speaks from Jakarta (Friday). The data calendar will provide a full picture of inflation in Q1. The CPI (Wednesday) is seen slowing to a 0.3% pace (q/q, sa) in Q1 from the 0.4% growth rate in Q4. PPI (Friday) is expected to moderate to a 0.2% clip (q/q, sa) from the 0.3% rate in Q4. Trade prices for Q1 are due Thursday.

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