Financial markets review – 22 April 2016

Monday 18 April

• The OPEC meeting ended on 17 April and major producers walked away without any agreement on a production freeze. However, Kuwait forced a production cut following a public sector strike.
• NY Fed President Dudley mentioned that economic news out of the US has been ‘most favourable’, as well as citing confidence in the Fed hitting their 2% inflation objective, as well as sounding positive on recent improvement in Europe’s growth outlook.

Tuesday 19 April

• The ECB released the results of its Q1 bank lending survey. It was generally supportive of an improvement in euro area lending conditions which will offer some relief given recent weaknesses in bank equities and concerns over the sector.
• April’s ZEW survey out of Germany was fairly mixed. The index declined unexpectedly by 3pts to 47.7 (vs. 50.8 expected), the expectations index was however up a robust 6.9pts to 11.2 (vs. 8.0 expected) and the highest level this year.
• In the US, the latest housing market indicators were softer than expected. Housing starts were recorded as falling -8.8% MoM last month (vs. -1.1% expected), whilst building permits (-7.7% MoM vs. +2.0% expected) also fell sharply.

Wednesday 20 April

• In the US, existing home sales print of +5.1% MoM was ahead of expectations (+3.9% expected)
• The US Treasury yields moved higher and the benchmark 10y (which rose 6bps) finished at 1.846%, highest level since March.
• Bloomberg US financial conditions index was up nearly 6bps yesterday, indicative of easing of financial conditions.
• In the UK, the unemployment rate was reported as holding at 5.1% in February as expected, whilst the change in employment growth of 20k in the three months to the end of Feb was less than hoped for (60k expected). Earning data was softer than expected with average weekly earnings including bonuses printed at +1.8% YoY, well below expectations (+2.3% expected). 

Thursday 21 April

• During the ECB meeting Mario Draghi offered more clarity on the details of EUR corporate bond purchasing programme.
• In Japan we have seen flash manufacturing PMI for April showing a decline of 1.1pts to 48.0 (vs. 49.5 expected). In China the MNI business indicator for this month showed a marginal rise of 0.6pts to 50.5, the first reading above 50 since January.
• In the US, the latest initial jobless claims print showed claims fell another 6k last week to 247k (vs. 265k expected) and marking a new fresh low since 1973. On the flipside, the Philly Fed manufacturing survey was disappointing after falling 14pts to -1.6 (vs. +9.0 expected).
• Over in Europe, retail sales data out of the UK disappointed in March. Excluding auto fuel, sales were down more than expected -1.6% MoM (vs. -0.3% expected) whilst fuel sales were also down heavily (-1.3% MoM vs. -0.1% expected).
• The Euro area consumer confidence reading to -9.3 for this month, an improvement of 0.4pts.

Friday 22 April

• In Europe, German Composite PMI in April came out above expectation at 51.9, compare to a forecast of 51.0; European Composite PMI was slightly below expectations (53.0 vs 53.2), whilst service PMI was in line with expectations (53.2 vs 53.3).
• Core CPI (MoM) in Canada came for March was at 0.7%, beating expectations of 0.3%, its core retail sales also came in positively at a 0.2% gain, compare to a forecast of -0.5% decline.