The Week Starts Now

WHERE WE STAND – I don’t wish to appear curmudgeonly here, having groaned about how volatile markets were earlier in the month, but this slightly more subdued spell that we seem to currently be enduring is a little too dull for my liking.

Still, it does feel like the recent break in the torrent of tariff headlines could well be lulling participants into something of a false sense of security. We remain in a period of inertia, as the 90-day pause on ‘reciprocal’ tariffs rolls on, uncertainty remains elevated, and concrete progress towards longer-lasting trade deals remains elusive.

A jam-packed calendar also lies ahead this week, more on which below, with anticipation ahead of that plethora of event risk also helping to keep a lid on conviction across the board.

Anyway, that lack of conviction also means a lack of material on which for me to write – contain your excitement about that, please.

We did have a couple of macro releases yesterday, though, with consumer confidence – per the Conference Board – falling to fresh covid lows at 86.0, while the JOLTS job openings print came in at a dismal 71.92mln, well below the 7.500mln consensus. I’m reluctant, however, to read too much into this data, with JOLTS being somewhat stale and from prior to ‘Liberation Day’, while the consumer confidence figure is hardly new information, as other surveys have already pointed to sentiment having fallen off a cliff.

It's safe to say that the data, nor yesterday’s news flow, moved the needle particularly much for market participants. The dollar edged higher against peers, while Treasuries gained across the curve, and stocks advanced on Wall Street, as gold faced headwinds.

Given the lack of fresh info, however, it should be no surprise that my overall biases remain the same – namely, rally selling in both equities and the dollar amid continued outflows from the US, while also buying the dip in gold, which remains the only real haven in the present unstable political, and geopolitical environment.

Finally, in a bit of bad news, having had to endure Mark Carney as BoE Governor at the beginning of my market career, it looks like I must once again endure the ‘unreliable boyfriend’, albeit this time as Canadian PM. Carney’s Liberal party, though, are set to rule by minority government after elections on Monday, with the loonie softening as a result of the elevated political uncertainty that such an electoral outcome introduces.

LOOK AHEAD – In many ways, the week starts now.

A data deluge awaits today, with the docket highlighted by the first read on US Q1 GDP. While consensus sees the economy having expanded by 0.3% on an annl. QoQ basis in the first three months of the year, yesterday’s trade data, showing a record deficit last month, and one 10% wider than expected, has substantially raised the risks of the economy having contracted in the first quarter. Other notable US releases today include the April ADP employment report (ignore it!), MNI’s Chicago PMI (likely skewed by Boeing), Q1’s employment cost index (stale), and the March PCE figures (Chair Powell’s already told us core will print 2.6% YoY).

Elsewhere, on the data front, the first read on Q1 eurozone GDP is also due, with the economy set to have grown a modest 0.2% QoQ, before headwinds stemming from tariffs begin to have an impact from the second quarter onwards. The latest ‘flash’ inflation data is also due out of Germany, ahead of the eurozone-wide data due on Friday.

For Treasury participants, focus will fall on the quarterly refunding announcement, as the Treasury outline the issuance breakdown for the $514bln Q2 borrowing estimate that was issued on Monday. While Treasury will likely not want to ‘rock the boat’ given recent market instability, focus will fall primarily on whether prior guidance as to coupon sizes being maintained for coming quarters remains in place.

Finally, a chunky corporate earnings slate lies ahead as well, highlighted by reports from Microsoft (Consensus sees Adj. EPS $3.21, Qtrly Revs $68.5blnl; options price Exp. Move +/-4.2%) and Meta (Consensus sees Adj. EPS $5.25, Qtrly Revs $41.4bln; options price Exp Move +/-7.5%).