A shiny façade
Investors' ambitions for the US economy appear to be exceeding its ability to deliver. Strong durable goods orders data on Thursday failed to prevent a dollar decline. Faster-than-expected growth in the first quarter was nullified by higher inventories and weaker consumption.
There was nothing at all wrong with the March figures for durable goods orders. The headline increase of 2.7% was way ahead of the forecast 0.8% increase. Nondefense capital orders excluding aircraft - business investment - went up by 1.3%, completely ignoring the 0.1% rise suggested by analysts. Yet investors were almost studiedly unimpressed and the US dollar was flat on the day.
It was easier for them to be dismissive of Friday's gross domestic product data. The annualized quarterly expansion of 3.2% represented quarter-on-quarter growth of 0.8%, significantly stronger than the 2.0%/0.5% put forward by forecasters. But behind that impressive façade the details were not so pretty. A large chunk of the expansion related to rising inventories of unsold stock and personal consumption growth slowed from 1.8% to 1.3%. Investors sent the dollar lower and it is down by a third of a cent on the day.
On Thursday, Sweden's Riksbank added its name to the lengthening list of central banks advocating patience. In a statement, the bank said its benchmark repo rate will remain at -0.25% for longer than previously indicated, probably into 2020. It cost the Swedish krona 1% on the day.
The NZ dollar took the lead on Friday and held onto it through the weekend. It starts today a cent and a half above Thursday morning's level. It was New Zealand's trade figures for March that made the difference. Exports increased by 21% while imports remained steady. The resulting $922 surplus was seven times as big as expected.
Assessments by the Confederation of British Industry told quite different tales for British retailers and manufacturers. Thursday's Distributive Trades Survey found retail sales rising for the first time since November last year. Friday's Industrial Trends Survey found manufacturers stockpiling, with inventories of raw materials, work-in-progress and finished goods growing at the fastest pace on record.
Today marks the beginning of Golden Week, a series of public holidays in Japan. A change of emperors tomorrow and Wednesday means two extra holidays plugging what had been a gap. So Japan will be taking an enforced 10-day vacation. That could mean a quiet time for the yen.
It will certainly mean a quiet time for Japanese economic data after a flurry on Friday morning. Tokyo CPI inflation sped up from 0.9% to 1.4% in April. Unemployment went up from 2.3% to 2.5%. Industrial production fell 0.9%. Housing starts were 10.0% higher on the year and construction orders were flat.
On today's agenda the statistics are almost all from either Euroland or the United States. This side of the Pond the numbers are for Italian producer prices, euro zone private loans and consumer and business confidence. The US contributions are personal consumption expenditure and the Dallas Fed's manufacturing index. Midnight brings GfK's measure of UK consumer confidence.