The Week Ahead for the U.S. Economy/Markets (22 April 2018)

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Here’s our view on this week’s U.S. related data releases.

The most important economic data releases for the week commencing 22 April 2018:

Monday

- Markit PMI (consensus exp. 55.3, 2.02% change)

- Existing Home Sales (consensus exp. 5.55M, 0.18% change)

Tuesday

- Housing Price Index (consensus exp. 0.5%)

- New Home Sales (consensus exp. 0.629M, 1.77% change)

Thursday

- Jobless Claims (consensus exp. 234K, 0.86% change)

- Durable Goods Orders (consensus exp. 0.4%)

Friday

- GDP Q1 (consensus exp. 2.3%)

- Core Personal Consumption Expenditures (Consensus exp. 1.5%)

This week we have several very important data releases. The main ones that are likely to move the market and will be closely watched are GDP, Core PCE and PMI.

The consensus expected range for GDP is between 1.6% and 2.7% among economists.

Since President Trump had been very vocal about how positive growth had been at 3% and even suggesting it could go a lot higher, this GDP reading carries political significance. A reading close to 2% will not be positive.

GDP grew 2.9% in the last quarter of 2017, which is higher than the advance reading of 2.7% and a reading lower than the previous period of 3.2%. Figures have generally been in line with market expectations.

Consumer spending has been positive, although in Q1 it had not had much impact from the tax changes. Exports are also relatively strong and, in general, purchases have been positive.

Retail sales jumped last month breaking the 3-month negative trend at 0.6%. The primary reason behind the boost was purchases of motor vehicles at an increase of 2%.

From a fiscal and political point of view, there are a lot of uncertainties which may weigh on industrial sentiment, including the current trade tariff saga. However, it may be too soon to start seeing signs of that in economic data. In any case, this month’s readings will be interesting benchmarks for what may unfold in the coming months. With that being said, it is also important to note that global demand has been strong and import and export data has been high recently.

We have seen strong demand in housing recently, with limitations in supply. Which would obviously contribute to rising prices. Inflation also ticked up to 2.2% in February from 2.1% the previous 2 months.

On the flip side we could see Existing Home Sales and New Home Sales fall in March due to higher prices. March also saw the highest inflation rate in a year at 2.4%, this is partly due to shelter rising faster at a rate of 3.3% compared to 3.1% previously.

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