Could Have Been Worse

Risk appetite is better this Monday morning than it was last Friday when the world was bracing for the Iranian retaliation on Israel. Iran fired more than 300 drones and missiles on Israel on Saturday night, but only a small number reached Israel, limiting damages. There were no fatalities, just an army base was slightly damaged.

RBNZ May Start Laying Groundwork for a Rate Cut

New Zealand’s economy shrunk in the final three months of 2023, entering a technical recession for the second time in 15 months. In the bigger picture, economic growth appears to have stagnated, much like in Europe and the United Kingdom. For policymakers, this is probably seen as a necessary price for bringing inflation under control, and all the indications are that it is working.

Why is Gold Defying Gravity?

Gold entered a flying mode at the beginning of March, surpassing its previous record high of $2,135 hit on March 7. The metal consolidated only for a while thereafter before rallying again during the last days of the month to continue conquering uncharted territory. And all this even during periods when the dollar and Treasury yields were rising on the back of easing bets about Fed rate cuts.

BoC to Hold the Line on Interest Rates on Mixed Economic Data

The Bank of Canada is widely expected to leave interest rates unchanged for a sixth consecutive policy decision on Wednesday. We expect the wording of the policy statement to leave options open for how long it plans to leave interest rates at current levels before pivoting to cuts.

Weekly Economic & Financial Commentary: Strong Jobs Numbers Diminish Urgency for Rate Cuts

Nonfarm payrolls expanded 303K in March, surpassing all estimates submitted to Bloomberg. The continued strength in hiring suggests less urgency for policymakers at the Federal Reserve to lower the target range of the fed funds rate. Recent comments from FOMC members have homed in on the jobs market's underlying momentum as justification to wait and allow for more inflation data.

Will German Industry Continue to Look Weak

Today, we look out for German industrial production data for February, which will give more information on the state of the German industry that is still very weak.

US Money Markets Increasingly Push a First Cut by Fed Further into Time

US money markets increasingly push a first cut by the Fed further into time and will look for additional evidence supporting their case in a reaccelerating (headline) CPI. The dollar neither on Friday neither this morning really stands to benefit from the yield support, despite being driven by the real component and concentrating at the front-end of the curve (>10 bps).

Sunset Market Commentary

Trading to the new week took a slow start data-wise. European production data for sure are no market movers. However, for once, we mention German February production coming out on the stronger side of expectations for the second consecutive month (+2.1% M/M; -4.9% Y/Y vs -6.8% expected). The report won’t change the ECB’s assessment on the timing of the start to the rate cut cycle.

US CPI Data Unlikely to Ease Sticky Inflation Worries, But Will Markets Care?

Inflation data according to the CPI and PCE measures have started to diverge lately, clouding the outlook just as the Fed seeks more clarity on where prices are headed. Headline CPI has persisted above 3.0% since last summer, while core CPI has been declining at a snail’s pace.

First Impressions: NZIER Survey of Business Opinion, Q1 2024

Business confidence came back down to earth with a thud in March, after a strong bounce last December. Businesses reported much tougher conditions over the last quarter, and were downbeat on their investment and hiring plans.