A quick recap from last week and you will understand why the weekend press used the word Stagflation. In the US GDP for Q1 was +1.6%, well below the 2.5% consensus estimate and core PCE printed at 3.7%. Above the consensus estimate of 3.4%. Lower growth and higher inflation is not an economists favourite formula. So what is in store this week?
Today there is a holiday in Japan and over the course of the week there are May Day Celebrations. Data wise there is a Federal Reserve Meeting, Non Farm Payrolls on Friday and earnings from Amazon and Apple, combine this with Month End activity and we have a very busy week. While the Fed is not expected to change policy, the discussion will be based around whether the Fed cut once or twice this year and then if Donald Trump wins the elections, what will he do with regards to tariffs and broader economic impact.
Overnight we have seen USDJPY punching through 160, 160.17 the high on Bloomberg. This is its weakest level in 34 years before rebounding strongly and raising speculation authorities may have intervened, we open at 156.80. Bitcoin fell 2.1% to $62,308.76, Ether fell 3.5% to $3,194.54, the yield on 10-year Treasuries declined four basis points to 4.66%, West Texas Intermediate crude fell 0.7% to $83.23 a barrel, Spot gold fell 0.2% to $2,332.48 an ounce. As for today we have CPI readings for Spain and Germany, ahead of the Eurozone figures to be released tomorrow. In the USA we have the Dallas Fed’s manufacturing index for April which is expected to show modest improvement and on the speaking front we hear from Lane, de Cos and Guindos from the ECB. It will be a quiet start to a very busy week.
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