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Financial markets review – 1st April 2016

Friday 25 March to Monday 28 March

  • There was an unexpected upward revision to the third estimate of Q4 GDP in the US to 1.4% QoQ (from 1.0%).
  • US housing market data was reserved for pending home sales of a +3.5% MoM rise for the month of February (vs +1.2% expected) which was the biggest monthly gain in 12 months. Additionally, the advance goods trade balance last month showed a slightly wider than expected deficit ($62.9bn vs $62.2bn expected).
  • The Dallas Fed manufacturing survey bounced 18.2pts this month to reach the highest level since November 2015.

Tuesday 29 March

  • Fed Chair Yellen reaffirmed her cautious stance on any change in Fed monetary policy, effectively ruling out any scope for rising rates in April.
  • In the US, the consumer confidence index for March increased to 96.2 (vs 94.0 expected) from an upwardly revised 94.0 last month. While the details showed the present situation index declining for the second consecutive month, the expectations index did retrace nearly its entire February decline.
  • In Europe the ECB published a report on its money and credit aggregates for February. The M3 money supply growth rate was unchanged at 5.0% YoY as expected, additionally there was a reported increase in loans to both households and non-financial corporates.

Wednesday 30 March

  • In Europe the main release was a better than expected inflation report out of Germany. The March CPI number came in at +0.8% MoM (vs +0.6% expected) which lifts the YoY rate up to +0.3%.
  • The Euro area confidence indicators for this month show a mixed picture. The headline economic confidence reading fell 0.9pts to 103.0 (vs 103.8 expected) which is the lowest print since February 2015. Industrial confidence was unchanged, services confidence dropped but the business climate indicator was a slightly higher.
  • In the US, the ADP nonfarm employment change in March came in slightly above expectations (200k vs 194k).

Thursday 31 March

  • The Chicago PMI reading gained 6pts last month to a better than expected 53.6 (vs 50.7 expected) and the second highest reading since last July.
  • The German unemployment rate remained unchanged at 6.2%, whilst Eurozone CPI (YoY) remain unchanged at -0.1%.
  • Q4 UK GDP (YoY) growth beat expectations at 2.1% (vs 1.9%). UK mortgage approvals also exceeded expectations (73.9k vs 73.5k expected) while net lending and consumer credit numbers met market expectations.
  • Standard & Poor’s revised its outlook on China’s sovereign debt, which it rates AA-, to “negative” from “stable”, reflecting the rating agency’s expectation that the economic and financial risks to the Chinese government’s creditworthiness are gradually increasing

Friday 1 April

  • China’s manufacturing PMI rebounded 1.2pts in March to a better than expected 50.2 (vs 49.4 expected) which is the first reading above 50 since July last year. The non-manufacturing PMI also improved in March, rising 1.1pts to 53.8.
  • Japan’s Tankan business survey shows that business sentiment among large manufactures was the weakest since mid-2013.
  • The European manufacturing PMI for March came in slightly above expectations (51.6 vs 51.4), with Germany and Italy PMI beating expectations whilst UK and Spain slightly missed targets.
  • US non-farm payroll in March was released at 215,000, beating the market expectation of 205,000, whilst the unemployment rate stayed at 4.9% as expected and labour force participation rate rose to 63%, the highest in two years.

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