Headlines will revolve around geopolitics in the days ahead for obvious reasons, but a crowded macro schedule has the potential to produce a few notables too.
Up first is an update on consumer spending in the US, where retail sales probably rose 0.4% last month, according to dozens of people who get paid to be wrong.
A consensus print would mark a second consecutive monthly increase. Eyes will be on the control group, which’ll help refine Q1 GDP expectations. The Atlanta Fed’s GDPNow tracker showed 2.4% as of the most recent reading, for whatever that’s worth.
Nominal spending fell sharply in January and the following month’s rebound was generally viewed as underwhelming. That said, real personal spending as reported by the BEA was very solid in February.
Obviously, a warm read on retail sales would reinforce the message from March payrolls and CPI, both of which suggested the Fed won’t be (and shouldn’t be) in any hurry to cut rates. Rate cuts are now a second-half story in the US, according to market pricing. Assuming that’s accurate, Jerome Powell will have to contend with the election when pondering whether, and by how much, to move at the September SEP meeting.
“The headwinds of higher borrowing costs and elevated prices (to say nothing about forward inflation expectations) have long been cited as potential drags on consumption in real terms [but] there has been scant evidence of this dynamic in the realized data,” BMO’s Ian Lyngen and Vail Hartman wrote. “While at times the sentiment measures have pointed toward a lower willingness to spend, consumption nonetheless continues to grow,” they added, noting that labor market resilience “is undoubtedly a key underpinning of consumers’ comfort in the face of higher rates.”
The first of this month’s US housing market updates are also due, starting with NAHB which is seen at 51 for April. An as-expected read would mark the second straight month during which more US homebuilders said conditions are good than poor. (50’s the demarcation line.) Housing starts figures covering last month are due Tuesday and Thursday’s key read on existing home sales is expected to show a meaningful decline. Recall that previously-owned home sales are coming off two straight monthly gains.
The list of Fed speakers is long. Powell will participate in the IMF/World Bank meetings in Washington and markets will also hear from Barkin, Bostic, Bowman, Goolsbee, Jefferson, Logan, Mester and Williams. Suffice to say “less is more” isn’t a mantra this Fed susbcribes to when it comes to communications.
Overseas, the UK will release wage and inflation data for March. That’ll be notable. Well, it’ll be notable if you’re the kind of tortured soul who wakes up at 5:15 AM to update Excel sheets while your D&G Bialetti heats up. The BoE’s waiting for an excuse to cut. The hawkish dissents in the MPC vote split were purged earlier this year. It’s up to the data now.
Perhaps the biggest macro news of the week will come from Beijing, where Xi’s beholden statisticians will tell the world how close they were able to get in a quarterly goal-seeking exercise to find 5% real growth.
As Bloomberg noted — without so much as a hint of irony — China’s “first-quarter expansion probably came in right at 5%.” Imagine that.
China will release activity data for March covering retail sales, industrial output and cumulative fixed investment concurrent with the GDP figures.
Last week’s updates from Beijing suggested the world’s second-largest economy continues to struggle with lackluster domestic demand and, as a consequence, deflation.
In other words: Nothing a major war can’t fix.
