US OUTLOOK/OPINION: Genuine Consensus For Q1 Real GDP Growth Likely Lower [1/2]
Apr-30 09:45
Today sees a rare double release of the Q1 advance national accounts (0830ET) before the monthly PCE report for March (1000ET) owing to where month-end falls.
- The Q1 advance release will see the first estimate of real GDP growth and the main expenditure breakdown but no revisions or GDI. It follows 2.45% annualized in Q4 and 3.1% in Q3.
- Bloomberg consensus sees real GDP growth at -0.2% annualized but that is likely too optimistic after yesterday’s advance goods trade report where consumer goods imports surged 27.5% M/M in tariff distortions. This is nominal though (with the volumes details only available on May 6) which further complicates the read-through to quarterly volumes data released today.
- Indeed, the median of the 26 responses submitted yesterday (giving a chance to have factored in the trade data) was -0.8% annualized. That includes Goldman Sachs tracking which shifted from -0.2% late last week to -0.8%.
- The Atlanta Fed’s GDPNow is more pessimistic still, with its gold-adjusted estimate of -1.5% (which should better reflect actual GDP data than its headline estimate of -2.7%).
- With likely particularly large net trade swings at play, we expect domestic demand components will be looked at more closely than usual for a sense of the underlying slowdown.
- Here, Bloomberg consensus looks for real personal consumption growth of 1.2% annualized after 4.0% in Q4. GDPNow is very similar, with 1.4% annualized, adding 0.9pp to real GDP growth after 2.7pp in Q3 and 2.5pp in Q3. That weak patch might have been despite some tariff front-running although the monthly data should continue to offer more color here.
- For a broader look at domestic demand expectations, final sales to domestic purchasers - i.e. final domestic demand - are seen adding 2.2pps in Q1 (after 3.0pp in Q4 and an average 3.3pp through 2023-24). Final sales to private domestic purchasers meanwhile are seen adding 1.95pp in Q1 (after 2.5pp in Q4 and an average 2.65pp through 2023-24).
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EUROPEAN INFLATION: MNI Projects 2.2% Y/Y German National CPI, Core 2.6%
Mar-31 09:44
From state-level index data that equates to 89.1% weighting of the national February flash German CPI print (due at 13:00 GMT / 14:00 CET), MNI estimates that national CPI (non-HICP print) rose by 0.3-0.4% M/M (Feb 0.4%) and rose 2.2-2.3% Y/Y (Feb 2.3%). See the tables below for full calculations.
- Analyst consensus stands at 2.2% Y/Y and 0.3-0.4% M/M, so the release appears to come in inline.
- Current tracking of core CPI (ex-energy and food, based on 50% of the national index) implies around 2.6% Y/Y (2.7% in Feb) and 0.6% M/M (0.3% Feb).
- We will provide a follow-up bullet looking at underlying drivers in due course.
- Note: These estimates are in relation to the national CPI print, not the HICP print which feeds into the Eurozone HICP print that the ECB targets. The magnitude of surprises to consensus can sometimes be different due to the different methodologies and weights used in national CPI vs HICP - but the direction of the surprise is normally the same.
| Y/Y | March (Reported) | February (Reported) | Difference |
| North Rhine Westphalia | 1.9 | 1.9 | 0.0 |
| Hesse | 2.4 | 2.3 | 0.1 |
| Bavaria | 2.3 | 2.4 | -0.1 |
| Brandenburg | 2.3 | 2.3 | 0.0 |
| Baden Wuert. | 2.2 | 2.5 | -0.3 |
| Berlin | 1.9 | 2.0 | -0.1 |
| Saxony | 2.5 | 2.3 | 0.2 |
| Rhineland-Palatinate | 2.0 | 2.4 | -0.4 |
| Lower Saxony | 2.4 | 2.5 | -0.1 |
| Saarland | 2.0 | 2.4 | -0.4 |
| Saxony-Anhalt | 2.9 | 3.0 | -0.1 |
| Weighted average: | 2.22% | for | 89.1% |
| M/M | March (Reported) | February (Reported) | Difference |
| North Rhine Westphalia | 0.3 | 0.4 | -0.1 |
| Hesse | 0.4 | 0.3 | 0.1 |
| Bavaria | 0.3 | 0.4 | -0.1 |
| Brandenburg | 0.4 | 0.6 | -0.2 |
| Baden Wuert. | 0.2 | 0.5 | -0.3 |
| Berlin | 0.6 | 0.4 | 0.2 |
| Saxony | 0.6 | 0.3 | 0.3 |
| Rhineland-Palatinate | 0.2 | 0.2 | 0.0 |
| Lower Saxony | 0.3 | 0.4 | -0.1 |
| Saarland | 0.2 | 0.3 | -0.1 |
| Saxony-Anhalt | 0.7 | 0.5 | 0.2 |
| Weighted average: | 0.36% | for | 89.1% |
US TSYS: 10s Stabilise Around 4.20%, March Yield Lows Unchallenged
Mar-31 09:40
10-Year Tsy yields stabilise around 4.20%, ~10bp off the March low (4.104%) and a couple of bp off session lows.
- TY futures back to 111-17+ vs. session highs of 111-22+. Resistance at the March 20 high (111-17+) pierced, with bulls now looking to force a break above the March 11 high (111-25) as they aim to build further on last week’s gains. The medium-term trend condition is the contract is bullish.
- U.S. reaction to the risk-off price action seen in Asia & the London morning now eyed.
AUD: Most Recent Analyst Views
Mar-31 09:33
- *ING note that AUD & NZD have been the big losers in the G10 in the second half of March as pressure from Chinese yuan proxy trades intensified. They don’t see much respite in sight given their relatively pessimistic view on the US trade policy to be rolled out in April. ING are still targeting a move to 0.62 in AUDUSD before they can think about calling for the bottom.
- *TD Securities maintain their bias to position for steeper curves and a weaker AUD with "Liberation Day" likely to overshadow the RBA meeting.
- *JP Morgan engages in EURAUD downside this week to tactically trade relative tariff exposure. Encouragingly, AUD screens more favourably on their FX quant TEAMS model with the currency buoyed by its forecast revision and activity surprise index scores keeping its ranking relatively firm.
- *Goldman Sachs believe markets continue to look more vulnerable to a downside surprise to the US outlook than an upside one. GS say the weaker momentum in the soft indicators and broadly lower sentiment raises the odds that the hard data begins to follow suit. The miss in personal spending adds to that case and increases the likelihood that markets view tariffs as most negative for the US. For that reason, GS continue to have a bias towards lower longer-end yields and equities—and they stick with their open trade recommendation to short AUD/JPY with a target of 90.5.
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