Sentiment is moderately negative this Monday morning, after Spain reported its economy shrank in Q1, putting the economy in the second recession since 2009, and before the Chicago PMI numbers are released at 9:45am EST. Data out of Asia was mostly worse than estimates overnight, including Taiwan’s GDP numbers, South Korea’s industrial production, and Singapore’s unemployment rate. As if all of this bad news wasn’t painting a clear enough picture, S&P has cut the ratings for 11 Spanish banks citing, “potentially negative implications” from the nation’s downgrade last week. U.S. treasuries gained modestly overnight, with yields consolidating near recent lows on daily charts amid investors concern about EU debt, austerity, upcoming elections, and U.S. growth. The U.S. 10yr is trading down slightly at 1.926%, with futures on the S&P 500 down slightly at -0.094%, and the dollar is strengthening against the majority of its peers. In the commodity space, copper has fallen -0.5%, wheat has fallen more than -1% as U.S. crop development increases, and Brent Crude is heading for its first monthly drop since December.
This week look out for Spanish 5yr note auctions coming up on Thursday, U.S. payrolls on Friday, the French presidential election on Saturday, and the Greek Parliamentary election Sunday.
Today’s Economic Data Lineup (EST)
8:30am: Personal Income, Mar., est. 0.3% (prior 0.2%)
8:30am: Personal Spending, Mar., est. 0.4% (prior 0.8%)
8:30am: PCE Deflator (MoM), Mar., est. 0.3%
8:30am: PCE Deflator (YoY), Mar., est. 2.2% (prior 2.3%)
8:30am: PCE Core (MoM), Mar., est. 0.2% (prior 0.1%)
8:30am: PCE Core (YoY), Mar., est. 2.0% (prior 1.9%)
9:45am: Chicago PMI, Apr., est. 60.5 (prior 62.2)
10:00am: Revisions: Retail Sales
10:00am: NAPM-Milwaukee, Apr., est. 53 (prior 51.8)
10:30am: Dallas Fed Manu. Act., Apr., est. 8 (prior 10.8)
5:30pm: Fed’s Fisher speaks on jobs in Beverly Hills, CA
9:00am: France to sell up to €4.2b 91-day, €1.6b 154-day, €2.2b 364-day bills
11:00am: Fed to purchase $1.5b-$2b notes in 2/15/2036 to 2/15/2042 range
11:30am: U.S. to sell $30b 3-mo., $28b 6-mo. bills
- It is likely that consumer spending in the U.S. rose in March as incomes grew, an indication the biggest part of the economy will help sustain the expansion, according to economists before the report is released today at 8:30am EST.
- Spanish GDP shrank less than previously forecast in Q1, as the economy entered its second recession since 2009. GDP fell -0.3% versus forecasts calling for a decline of -0.4%. Spain is struggling to convince investors it can narrow its budget deficit by more than 3% of GDP, while its economy shrinks and unemployment nears 25%.
- S&P downgraded 11 banks, including Banco Santander SA, and has announced it may also downgrade six other lenders after citing “potentially negative implications” from the nation’s downgrade last week.
- The inflation rate in the euro regions fell to 2.6% from 2.7% in March according to the EU’s statistics office in their initial estimate today.
- Italy’s inflation rate remained unexpectedly high at 3.8%, more than the 3.6% forecast by 12 economists in a Bloomberg News survey.
- German retail sales, adjusted for inflation and seasonality, rose +0.8% from February when they fell a revised -0.9%, but came in slightly below economists’ estimates of +1%, according to the Federal Statistics Office.
- France’s presidential-election runoff is slated for May 6 amid Socialist Hollande’s push back against Germany’s focus on deficit reduction.
- South Korea’s industrial production rose at a slow pace, with output gaining +0.3% from a year earlier after rising a revised 14.3% in February. The median estimate from a Bloomberg News survey was for a 2.2% increase. Production fell -3.2% from when it gained a revised +0.6%.
- Taiwan’s GDP rose +0.36% last quarter from a year earlier, and after climbing +1.89% in the previous period according to a report out today.
- Singapore’s unemployment rate climbed to 2.1% last quarter from a three-year low of 2%.
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