April 27, 2023

Daily Report 27/04/2023

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The CBI retail sales survey recorded a small improvement to 5 for April from 1 the previous month and above expectations of zero. Retailers, however, expect a small decline in sales for May with underlying caution still the dominant influence. Markets remain confident that the Bank of England will increase interest rates again at the May policy meeting. The domestic impetus was limited during the day with markets monitoring risk conditions closely. An attempted rally in equities and a weaker dollar triggered a Sterling move to highs against the US currency, but there was a fresh setback later in the session as equities moved lower again and risk appetite deteriorated.

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The Euro continued to recover ground after Wednesday’s European open with a move higher against the dollar helping to underpin confidence. German consumer confidence improved to -25.7 for May from -29.3 previously and slightly stronger than expected. ECB vice-president de-Guindos stated that the rate of wage settlements is going to accelerate and that the labour market is strong. Markets expect that the ECB will maintain a generally hawkish policy stance, although market expectations are that the bank will limit the May rate hike to 25 basis points with only a 20% chance of a 50 basis-point rate hike. Longer-term rate expectations will be important for the Euro.

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US durable goods orders increased 3.2% for March after a revised 1.2% decline for the previous month and significantly above consensus forecasts of 0.7%. The gains were, however, led by the volatile transport sector and the increase in underlying sales was held to 0.3% after a 0.3% decline the previous month. The US goods trade deficit narrowed sharply to a 4-month low of $84.6bn for March from $92.0bn the previous month with a significant gain for exports and a decline in imports. The trade position should provide a small lift to the first-quarter GDP estimate. US Treasuries overall were little changed with the 10-year yield holding around 3.40%.

Key Data

13.30 Gross Domestic Product Annualised (Q1) Exp. 2% Prev. 2.6%