More signs of
sentiment turn.US equities slipped from the opening, and remained
subdued for the remainder of the session, ending down 1.1%. Bank shares were
dragged down by the FDIC saying some bank chiefs may be fired. US data was generally at or better than consensus,
apart from IP after revisions. That result was enough for Westpac's US data surprise model to trigger a signal,
suggesting negative data surprises are more likely during the next few weeks, a
negative for risk currencies. Oil fell 3.9% on sentiment. US 3mth Libor
continued the progression down, easing 2.5bp to 0.825%. Ten year notes were 5bp
higher, better headline IP and consumer sentiment reports hurting. In credit
news, the Kazakhstan government ruled out assisting defaulter BTA
bank (75% government owned).
The US dollar basket rose 0.9%,
inversely with risk appetite. EUR
fell from 1.3600 to 1.3480, GDP for Euro-zone weaker than expected. USD/CHF rocketed from 1.1050 to 1.1250, arousing
suspicions the SNB had intervened. GBP
ranged-traded between 1.5150 and 1.5290, ending slightly lower at 1.5180. USD/JPY slipped from around 96 to 95 on safe-haven yen
AUD fell from 0.7600 to 0.7480, following the
broader moves down in risk currencies.
NZD broke below the previous day's low to reach
0.5835, a weak retail sales report weighing. AUD/NZD found 1.2850 sticky, and
spent much of the session congesting around 1.2800, in line with Westpac's flow
model signalling a near term top in this cross.
US UoM consumer
sentiment up from 65.1 to 67.9 in May,
with a 6.8 pts gain in the outlook component offsetting a 2.1 pts fall in the
current index. The headline is at its second highest reading (after August 08's
70.3) since March last year.
US Empire Fed index
rises to -4.6 in May adding to
the weight of evidence pointing to a slower pace of economic decline in the
second quarter. NY factory bosses' responses to the overall business conditions
question were much less negative for the second month running; shipments turned
(slightly) positive for the first month since September last year (i.e. the
best reading since the Lehman Bros meltdown); and the outlook index improved
for the 3rd month running. However the orders index gave up some of April's
gain and the jobs index improvement lagged the other activity indicators.
US April industrial
production also showed a slower pace of decline (the -0.5% outcome was the least weak since
-0.1% in July last year) but the imminent shutdown of Chrysler and GM auto
plants (already hitting the weekly jobless data for May) should soon see the IP
report turning down more sharply once more.
US CPI headline was flat in April thanks to falls in food and gasoline prices
offsetting the 0.3% rise in the core rate, which largely reflected another tax
driven spike in tobacco prices. Note that the headline CPI has been negative
for two months running but the core annual rate has trended higher since the
start of this year.
Japanese March core
machinery orders fell 1.3%.
That was better than anticipated. The small decline follows a downwardly
revised 0.6% gain in February. For the quarter, orders fell 9.9%, while the
projected outcome for Q2 is -5.0%. Also today, the domestic corporate goods
price index fell 0.4%mth, 3.8%yr in April, down from -2.2%yr in March.
Euroland GDP growth
surprised to the downside in Q1, with the aggregate shrinking a further 2.5%.
With most of the national data including downward revisions to Q4, when the
more detailed "preliminary" GDP figures are published on June 3, we
expect to see the Euroland Q4 outcome revised down from the current -1.6% (the
advance report never includes revisions). Also, the April CPI was confirmed at
0.6% yr, unrevised from the flash estimate and unchanged from March. The April
core rate surprised to the upside, lifting from 1.4% yr in March to 1.8% yr.
manufacturing shipments plunged 2.7% in March,
reversing their 2.2% Feb gain and resuming the steep downtrend that began in
August last year. Aerospace and auto parts led the fall, with some offset from
stronger sales of complete autos.
The break below 0.5865 (previous day's low) was
significant, and tilts momentum to the downside. Today's PPI report shouldn't
trouble the markets materially.
Country Release Last Forecast
18 May NZ Q1
Producer Output Prices 1.4% 0.5%
Output Prices β2.2% 0.0%
US May NAHB
Housing Market Index 14 13
Consumer Confidence 29.6 31.0
Trade Balance β¬bn β4.0 β3.8
UK May House
Prices %yr β7.3% β8.0%
19 May Aus
RBA Governor Stevens Speaking
of May Meeting
Sec. Henry Speaking to ABE
US Apr Housing
Starts β10.8 β2.0%
Permits β8.5 4.0%
β’ NZ Q1
Retail Sales Review (15 May)
β’ NZ Weekly
Forex Outlook (11 May)
β’ NZ Q1 HLFS
Review (7 May)
β’ NZ Weekly
Forex Outlook (4 May)
Economic Overview May 2009 (1 May)
β’ NZ Q1
labour market preview (30 April)
papers/publications are available on Online Research on Westpac
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