MACRO OUTLOOK: MNI US Macro Weekly: Jury’s Still Out On Q2 Downturn
May-30 20:51
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While the past week may be remembered for court decisions suspending the majority of the White House’s tariffs, it also brought further data evidence that the US economy did not fall off a cliff at the start of Q2.
- Consumer surveys (UMichigan, Conference Board) showed a downtick in consumer inflation expectations and improved sentiment, reflecting the US-China trade de-escalation on May 12.
- And while updated GDP data showed downwardly revised Q1 domestic demand, April personal consumption slowed but remained positive as underlying income growth remained solid.
- Likewise, though core durable goods orders retreated from Q1, a clear dropoff at the start of Q2 was not in full evidence. Regional Fed surveys signaled that activity stabilized in April-May, albeit at relatively weak levels, and labor market data pointed to incremental rather than sharp weakness.
- The point was underlined by the Atlanta Fed's nowcast for Q2 GDP growth which jumped to 3.84% on Friday from 2.18% in its May 27 update. Even if dramatic upgrade was due to a lower trade deficit in April as tariff front-running reversed, final domestic demand is still expected to be robust overall.
- Of course, things can change quickly: note Friday’s apparent re-escalation in US-China trade tensions and the temporary nature of the judicial tariff freeze (which in any case looks to be circumvented by the Trump administration), as well as the July “reciprocal” tariff negotiation deadline continuing to loom large.
- For the moment though, while uncertainty looks to be a constant, the data aren’t (yet) showing the degree of deterioration that had until recently been feared.
- Next week’s data highlights include key checkpoints for May, including ISM Manufacturing and Services surveys (which look likely to show some recovery versus April) and the US Employment report.
- Nonfarm payrolls growth is expected to moderate in May after a surprisingly robust 177k in April, with consensus currently around the 130k mark. The unemployment rate meanwhile is seen holding at 4.2% for what would be a third consecutive month.
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US TSYS: Tsys & Stocks Break Resistance, Month End Partially Cited
Apr-30 20:04
- Treasuries broke through narrow session range late Wednesday, look to finish mostly higher, curves moderately steeper with bonds underperforming all day.
- Early data driven volatility, Tsys tested major resistance after softer than expected April ADP at 62k (sa, cons 115k) after a downward revised 147k (initial 155k) in March.
- Rates and equities reverse course - extended lows after higher than expected GDP Price index, Personal Consumption and Core PCE data. Stocks rebounded after solid PCE income growth reflected in the PCE data partially offset by tariff impacts.
- Jun'25 10Y currently +7.5 at 112-12.5 vs. -16 high (10Y yld currently 4.1562%), resistance at 112-16 (1.0% 10-dma envelope) followed by 113-04 (76.4% retracement of the Apr 7 - 11 bear leg).
- Trade negotiation related headlines continued to deliver real vol to markets, but it appeared late bounce in rates and stocks was at least partially month end related.
US: Trump To Deliver Speech On 'Investing In America' Shortly
Apr-30 20:02
US President Donald Trump is shortly due to deliver his second major speech in two days to mark his first 100 days in office, following a speech in Michigan yesterday. Today's speech is entitled "Investing in America" and will be delivered from the White House Cross Hall. LIVESTREAM
- Trump is expected to tout a reported USD$5tn of investments in the US since his entered office. Per the BBC, he will be joined at the White House event by CEOs from Nvidia, GE Aerospace, Johnson & Johnson, Eli Lilly, SoftBank, and others.
- Trump’s campaign rally-style speech at Macomb Community College, Michigan, yesterday primarily focused on border security and immigration, the policy area where he retains the most public support amid a steady decline in his approval.
- Trump travelled to Michigan with a package of tariff relief for the auto industry designed to insulate the sector from the effects of ‘tariff stacking’. The Executive Order can be read here. A White House fact sheet here.
USDCAD TECHS: Trend Needle Points South
Apr-30 20:00
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4108 50-day EMA
- RES 1: 1.3906/3959 High Apr 17 / 20-day EMA
- PRICE: 1.3820 @ 16:51 BST Apr 30
- SUP 1: 1.3781 Low Apr 21 and the bear trigger
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
The trend set-up in USDCAD is unchanged and remains bearish. A fresh cycle low on Apr 21 reinforces the bear cycle and signals scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear mode position, highlighting a dominant downtrend. First resistance to watch is 1.3959, the 20-day EMA.
