Written Commentary
Digesting BoJ January minutes and German Ifo Business Climate, awaiting UK CBI Retailing, US Consumer Confidence, House Prices, New Home Sales and regional Fed surveys; raft of central bank speakers, China Boao Forum; UK, German and US debt sales
Germany: Ifo Business Climate turns the corner on ‘debt brake’ reforms, but still a long way to go to regain pre-pandemic range
U.S.A.: Consumer Confidence seen sliding further to 4-yr low as tariffs and Doge cuts sour consumer mood
EVENTS PREVIEW
as UK CBI Retailing, US New Home Sales & House Prices, Philadelphia Fed Services and Richmond Fed Manufacturing. Central bank speakers (Fed, ECB, BoE) will be out in force, as China’s Boao Forum (aka China Davos) kicks off. A busier day for government debt auctions with the UK offering 18-yr, Germany 5-yr and US 2-yr. Per se, the focus will remain on what is perhaps unsurprisingly a very piecemeal approach to actual US tariff implementation, which in reality is running along a different path to Trump’s ‘Liberation Day’ mantra, but then again his rhetorical style has always been sensationalist and bombastic, and also why focussing on the details of what is actually put in place cumulatively, rather than the ‘jawboning’ remains the best strategy.
** Germany – Mar Ifo Business Climate **
Today’s Ifo survey followed divergent signals from yesterday’s PMIs, with a stronger than expected pickup in the Manufacturing PMI, still well below the key 50.0 level, and Services dropping back to a sluggish 50.2 against forecast of an increase. The outcome was almost exactly as expected with the headline Business Climate moving up to 86.7 from 85.3, paced unsurprisingly by a jump in Expectations yo 87.7 from 85.6, and a modest uptick in Current Conditions to 85.7 from 85.0. All sub sectors showed a marked improvement on the month, though the sharpest rise was seen in Manufacturing. But as the attached chart underlines, while this looks to be a clear turn higher in trend terms, there is still a mountain to climb to get back to the pre-pandemic range, i.e. “good, but no cigar”.
** U.S.A. – March Consumer Confidence **
Today will be some insight into how consumers are reacting to Trump’s ‘no pain, no gain’ mantra and the chaos of his policy announcements, via way of Consumer Confidence, which has already given back the September through November jump to 112.8, with the consensus looking for another drop from 98.3 to 93.6, which would be the weakest reading since January 2021 (ironically the end of Trump’s first term). As ever the focus will be on the labour differential (Jobs Plentiful minus Hard to Get) and income expectations.
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