Sunset Market Commentary

Today’s eco calendar was light compared to earlier this week but that didn’t prevent a further sell-off on core bond markets. April US durable goods orders were stronger than expected, but March figures face a downward revision. Core shipments, input for GDP (investments), increased by 0.4% M/M following a 0.3% decline in March (earlier reported flat). US yields currently add around 2 bps across the curve.

Weekly Focus

Economic news was to the solid side this week with not least euro area PMIs painting a stronger picture. The main surprise came from manufacturing PMI which increased from 45.7 to 47.4 (consensus 46.1) while the service sector stayed at a decent level of 53.3.

Canadian GDP Per Capita Likely Shrunk for Seventh Consecutive Quarter in Q1

The Canadian economy likely grew more quickly in Q1 2024 based on headline figures, but it was not fast enough yet again to keep up with surging population growth. That means gross domestic product on a per-person basis contracted for a seventh consecutive quarter.

Week Ahead – US PCE Inflation and Eurozone CPI Data Enter the Spotlight

The US dollar stabilized this week, recovering a small portion of the losses it posted after the CPI data revealed that US inflation resumed its downtrend in April.

Could Developments in Iran and Saudi Arabia Turn the Tide for Oil?

News of the helicopter accident, which resulted in the loss of several senior Iranian officials including President Raisi, caused a sudden chill in market participants. However, the newsflow since Sunday has been subdued, allowing the oil price to resume its recent bearish trend.

US Manufacturing Disappoints Again

In the US, April industrial production fell slightly below market expectations, printing at 0.0% m/m SA (cons: 0.1%). Unexpectedly, manufacturing output declined in April by -0.3% m/m SA, driven by a decrease in motor vehicle output, while the March figure was revised down to 0.2%. This aligns with the ISM manufacturing PMI released earlier this month. Additionally, capacity utilization for April edged down to 78.4% SA, 1.2 percentage points below its long-run average (1972-2023).

Chinese Data Showed a Mixed, Rather Unconvincing Picture

Chinese data published this morning showed a mixed, rather unconvincing picture on the country’s economic recovery. On the positive side, April industrial production accelerated to 6.7% Y/Y from 4.5%, better than the 5.5% expected (YtD growth 6.3%). The rise, amongst others, was driven by chip production and autos which suggests some positive impetus from foreign demand.

Australian Dollar Hits 4-month High

The Australian dollar is lower on Friday. AUD/USD is currently trading at 0.6658 in the European session, down 0.31% on the day.

Pound Edges Lower, Markets Eye FedSpeak

The British pound is down slightly on Friday. GBP/USD is down 0.14%, trading at 1.2648 in the European session at the time of writing.

Crypto Market Ready to Grow Further

The crypto market cooled off on Thursday afternoon, but on Friday morning, buyers stepped up again, bringing capitalisation back to levels from the day before at $2.39 trillion. Strong growth was followed by rapid profit-taking, which is a necessary part of healthy growth, suggesting a high chance of continued gains in the coming days.