Macroeconomics: The Week Ahead: 14 – 18 April 2025

The Week Ahead – Preview:  

• Tech tariff relief likely to be short lived, as China Trade and Credit Aggregates, Singapore GDP and MAS policy easing are digested; NY Fed Expectations, corporate earnings and Fed speakers ahead
• China: export surge not a great surprise in context of tariff wars, softer than expected imports both a function of weak domestic demand and disruption to Brazil sot exports
• Week Ahead: China and US activity data, UK jobs and inflation, ECB and BOC rate decisions, slew of corporate earnings and miners’ production reports to vie with overarching trade war theme
• Charts/Tables: China Commodities Trade; Fed custody holdings of Treasuries; VIX vs MOVE volatility indices; EUR and JPY vs. USD long-term charts
• Free Live Commodities People Webinar – “Supply Chain Uncertainty: The Impact of US Tariffs on Global Trade”//** 16 April | 3PM BST / 10AM EDT – Spots are limited register here: Click here

Be that as it may, this week’s highlights by country:

– U.S.A.: Following another set of rather alarming Michigan Sentiment Inflation Expectations on Friday, the latest equivalent NY Fed survey is due on Monday, with the February survey having seen a modest upward shift in the 1-yr measure to 3.13% from 3.0%. A further moderate increase looks to be a certainty, but anything more than 20 bps would likely set off some alarm bells on the FOMC, even if in the very short-term it is going to be more focussed on whether it will have to deploy unconventional tools (i.e. not rates) to restore some calm to the money and Treasury markets. Tuesday has the final leg of inflation data for March via way of Import Prices, with a drop in oil prices expected to keep headline flat m/m, while the risks look to be to the downside of the forecast +0.3% m/m on the ex-Petroleum measure, given anecdotal evidence that exporters to the US were cutting prices to shift inventories ahead of tariffs. Headline Retail Sales should get a big boost from the jump in Auto Sales, with the consensus looking for 1.4% m/m, while ex-Autos sales are seen up 0.4% m/m, and the core ‘Control Group’ measure 0.6% m/m, boosted by some bigger ticket goods spending, also trying to beat tariffs, though restaurant sales may prove to be weak, and therefore imply a sharp drop in Q1 Personal Consumption GDP to 1.0% or less vs. 4.0% in Q4. Weak Manufacturing surveys and lower oil sector output predicate a forecast of -0.2% m/m in Industrial Production, with Manufacturing Output seen up 0.3% after a jump of 0.9% m/m in February. The week also has the first of the April regional Fed manufacturing surveys, with the unreliable and volatile NY survey seen at -12.5 from -20.0, and the Philly Fed measure is expected to drop to 3.0 from 12.5, while the NAHB Housing Market Index is forecast to edge down 1 pt to 38, and Housing Starts to see a reactive correction of -5.2% m/m after surging 11.2% in February (after storm and wildfire related disruption in January). Expect a good deal of unusual attention to the TIC Portfolio Flows data, above all to China’s holdings of Treasuries, though beware the potential for a lot of hyperbole about whether or not China is ‘dumping’ Treasuries in response to US tariffs.

– China: With the US and China mired in a brutal war on tariffs, the weekend credit aggregates offered some hope that stimulus measures are starting to get some traction, with New Yuan Loans jumping CNY 3.6 Trln against forecasts of CNY 2.96 Trln, and Aggregate Social Financing surging a whopping CNY 5.9 Trln against forecasts for a CNY 4.93 Trln rise. Still a closer look at the borrowing data highlights that Corporate borrowing was only slightly above the average for the past 5 years, and Household lending slightly below. Monday’s Trade data are expected to see a 4.6% y/y rebound from a LNY timing effect paced drop of 3.0% y/y in February, though Imports are seen down -2.1% y/y (vs. Feb +1.5%). All of which is well and good, but the focus is on the likely hefty impact of the massive escalation in the tariff wars with the US in April. Wednesday brings Q1 GDP and March activity indicators, with GDP forecast to slow somewhat to 1.4% q/q from 1.6%, which would see y/y slip to 5.2% from 5.4%. Monthly data are expected to be relatively solid with Industrial Production holding at a robust 5.9% y.t.d. y/y, but Retail Sales still sluggish on a historical basis, though accelerating to 4.3% y.t.d. y/y from 4.0%, with Fixed Asset Investment holding at 4.1%. Property sector indicators will likely remain desultory, with Investment barely changed at -9.7% y/y, and Sales likely to have slipped from a base effect flattered -0.4% y.t.d last month, with an open question on whether New and Used Home Prices can finally post a m/m rise after falling in every month since June and May 2023 respectively. But as these are all backward looking, the focus remains on which of the US and China are going to blink first on trade negotiations.

– Eurozone: Outside of Germany’s ZEW survey & PPI and final Eurozone CPI, the statistical calendar is bare. Unsurprisingly given equity and bond market turmoil, ZEW Expectations are expected to collapse to 10.0 from March’s 51.6, though Current Conditions are forecast to be little changed at a woe begotten -86.8. So all eyes will be on Tuesday’s ECB Q1 Bank Lending survey, expected to see lending conditions continuing to stabilize after 2 years of improvement, and Thursday’s ECB rate decision. While the hawks may argue that stable lending conditions suggest policy does not need to be eased further, they will likely find themselves in a minority, not only given the downside risks to the growth outlook due to tariff wars, but above all the sharp appreciation in the EUR (which as per attached chart has broken out of a 17 year downtrend) implying disinflationary pressures, along with the implied tightening in financial conditions from a steep rise in bond yields. While sticking to a narrative of the rate trajectory being largely determined on a meeting by meeting basis, it will likely signal some further scope for rates to fall by describing downside risks to the growth outlook as having risen, though noting enormous outlook uncertainty due to the evolution of trade wars.

– U.K.: The sharp push back on BoE rate expectations due to the much better than expected GDP data looks misplaced, but these are reactive markets, and the upward pressure on long-term rates worldwide is also playing a part. This week brings BRC Retail Sales with the like for like measure seen slipping further to a tepid 0.6%, after dropping from 2.5% to 0.9% February. Tuesday’s labour data are expected to paint a mixed picture on labour demand with HMRC Payrolls seen dropping -15K after two unexpected though modest increases, while the discredited LFS Employment is expected to pick up to 170K from 144K, this despite a sharp rise in the jobseeker numbers seen in the REC/KPMG survey, and a relatively sharp 44.1K jump in the Claimant Count in February. But rate expectations will be more sensitive to Average Weekly Earnings and Wednesday’s CPI, with the former forecast to see headline edging 0.1 ppt lower to 5.7%, but the ex-Bonus measure edging up by the same amount to 6.0%. Wednesday’s CPI is something of a non-starter given the sharp increases in Utility bills, Council Tax and other administered prices at the start of April, and unlikely to stir much reaction if forecasts of a 0.4% m/m rise in headline that would see the y/y rate dip 0.1 ppt to 2.7%, with core and Services also seen dipping to 3.4% y/y and 4.8% y/y respectively. Thursday’s BoE Q1 Bank Liabilities and Credit Conditions will be of some interest given the rise in longer-term yields, and the impact on both mortgage and SME business lending.

– Canada: Tuesday’s CPI may be quite decisive for Wednesday’s BoC rate decision, with the mid-February end of sales tax holiday likely to be the key driver of an expected 0.7% m/m rise, edging up both the headline and core CPI y/y rates by 0.1 ppt to 2.7% and 3.0% respectively. The BoC will however be watching the trend in discretionary goods and services prices not impacted by the sales tax fluctuations, which may exercise more downward pressure than expected (particularly travel services), and this may be just enough to tip the balance in favour of another rate cut, though a small majority of surveyed economists look for the BoC to hold rates at 2.75%, also in part dictated by the proximity of the April 28 general election.

– Elsewhere India’s CPI is forecast to ease modestly to 3.5% from 3.6% y/y, primarily on the back of lower fresh food prices, per se leaving average CPI comfortably below the RBI’s 4.0% target, and by extension opening the door to a further 25 bps rate cut. In Japan, Friday’s National CPI is seen echoing Tokyo CPI with headline unchanged at a lofty 3.7% y/y, but core measures continuing their upward march to 3.2% y/y ex-Fresh Food and 2.9% ex-Fresh Food & Energy. While this would certainly add to the case for a further rate hike, Ueda & Co have made it abundantly clear that they are in ‘wait and see’ mode for the next couple of months due to the array of uncertainties around the global economic outlook, and likely also keeping a wary eye on the JPY as it threatens to breach a long-term support trendline – see chart.

– In the commodities space, oil prices will continue to be closely watched, and it will be interesting to see how the monthly Oil Market Reports from OPEC and IEA contrast in terms of the supply and demand outlooks, particularly the intended OPEC+ increase in production. There are a number of conferences including China New Energy and Aluminium Expos, and the LNG and Hydrogen events in Budapest. For metals the focus will be on Alcoa’s earnings, as well as Q1 production reports from Antofagasta, BHP, Rio Tinto and Vale. This week’s monthly S&D reports include US NOPA’s soybean crush, and Sugar reports from Brazil’s CONAB and Unica. Last but not least, the WTO has the very thankless task of updating its Global Trade Forecasts. while the EU publishes its State of the Climate report.

– There are 31 S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: ABB, Abbott Laboratories, American Express, ASML Holding, Bank of America, Blackstone, Charles Schwab, China Unicom Hong Kong, Citigroup, CATL Contemporary Amperex Technology, CSX, DR Horton, Goldman Sachs, Hangzhou Hikvision Digital Technology, Heineken, Infosys, Interactive Brokers, Johnson & Johnson, M&T Bank, Marsh & McLennan, Netflix, Nordea Bank, Ping An Bank, PNC Financial Services, Progressive, Prologis, TSMC Taiwan Semiconductor Manufacturing, Travelers, Truist Financial, UnitedHealth, US Bancorp, Wanhua Chemical, Wipro.