Market Movers
The big event today will be US retail sales for April. Following disappointments in the previous months, we look for an increase of 0.6% m/m in core sales (control group), slightly higher than consensus of 0.5% m/m. Weekly credit lending as well as weekly retail sales figures point to a decent rebound in April. If confirmed, it will underpin the view of a recovery in Q2 GDP and boost confidence in a September Fed rate hike.
It is also time for Q1 GDP in the euro area. We look for a rise of 0.5% q/q (consensus 0.4% q/q) but there is some downside risk to our call, as German production numbers for March published on Friday were soft. Our forecast for German GDP in Q1 is 0.6% q/q (consensus 0.5% q/q), again with downside risk. There is a bit of uncertainty related to the German Q1 numbers as we have seen very strong retail sales in Q1 as a whole, whereas industrial production was less vigorous. In both France and Italy we look for a 0.3% q/q in Q1 GDP.
In the UK Bank of England releases its Inflation Report. BoE may revise down the growth forecast a bit, while revising inflation slightly up following the recent rise in the oil price. A focus point will also be expectations for wage inflation given the continued tightening of the labour market. We will also get news on this front today with the UK employment report. We expect the ILO unemployment rate (3M (NYSE:MMM)) to have stayed unchanged at 5.6% in March. The average weekly earnings excluding bonus (3M) will be key to watch and we expect an increase to 1.9% in March from 1.8% in February.
In Sweden, Prospera releases its monthly inflation expectation survey for money market players.
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