China GDP and US Industrial Data Boost Risk Appetite

Economic Data

- (US) MBA Mortgage Applications w/e Apr 11th: +4.3% v -1.6% prior; first rise in 6 weeks
- (BR) Brazil Apr Prelim IGP-M Inflation (2nd Preview): 0.8% v 0.8%e
- (ZA) South Africa Feb Retail Sales M/M: -0.2% v -0.5%e; Y/Y: 2.2% v 3.8%e
- (BR) Brazil Feb Economic Activity Index M/M: 0.2% v 0.3%e; Y/Y: 4.0% v 3.9%e
- (PL) Poland Mar CPI Core M/M: 0.3% v 0.3%e; Y/Y: 1.1% v 1.0%e
- (PL) Poland Mar Average Gross Wages M/M: 4.2% v 3.2%e; Y/Y: 4.8% v 3.9%e
- (PL) Poland Mar Employment M/M: 0.1% v 0.1%e; Y/Y: 0.5% v 0.4%e
- Baltic Dry Bulk Index -3.5% at 936 (17th straight decline)
- (US) Mar Housing Starts: 946K v 970Ke; Building Permits: 990K v 1.010Me
- (CA) Canada Feb Int'l Securities Transactions: C$6.1B v C$3.0Be
- (US) Mar Industrial Production M/M: 0.7% v 0.5%e; Capacity Utilization: 79.2% v 78.7%e; Manufacturing Production: 0.5% v 0.6%e
- (CA) Bank of Canada (BOC) left Interest Rates unchanged at 1.00%, as expected
- (US) DOE Crude: +10M v +1.5Me; Gasoline: -155M v -1.5Me; Distillate: -1.3M v 0Me

- Asia, Europe and US equity markets made gains after China managed to meet y/y Q1 GDP growth expectations. The positive tone has been supported in the US session by some decent industrial production data, while the Nasdaq has bene propped up by Yahoo's earnings gains. As of writing, the DJIA is up 0.59%, the S&P500 is up 0.35% and the Nasdaq is up 0.50%.

- WTI crude futures briefly touched $105 overnight, their highest level since May 2011, as the situation in Ukraine worsened. The contract is well off its highs in the wake of the US weekly inventory report, which showed crude inventories up by over 10M bbls last week, the biggest build since 2001, versus a consensus forecast for a 1.75M bbl gain.

- The March industrial production report beat expectations and the prior February gain was doubled in revisions. More importantly, capacity utilization rebounded much higher, to 79.2% from 78.4% in February, putting utilization at its highest level since the very beginning of 2008. This is only 0.9 percentage points below the long-run (1972-2013) utilization average.

- Both permits and housing starts missed expectations in March data out earlier this morning. The February housing starts were revised slightly higher and the March starts still showed growth from the revised Feb data. Analysts highlight the slowdown in multi-family starts after a spike higher at the end of 2014. Housing stocks are ignoring the report and are gaining in line with broader equity markets.

- The Chinese Q1 GDP data did not disappoint expectations last night, firing risk appetite and weakening the greenback. EUR/USD moved gradually higher before jumping to 1.3850 in the European session. The pair is back around 1.3810 presently. The weakening yen has run into resistance around 102.30, where USD/JPY has been stalled since early this morning.

- Shares of Bank of America are down more than 3% this morning as investors struggle to parse the caveats in the bank's first quarter earnings. The firm reported a headline loss of $0.05, well below expectations, but this was after $6.0 billion in litigation expense ($0.40) related to the FHFA legal settlement and reserves for mortgage-related matters. Much like JPMorgan and WFC last week, BoA's consumer residential mortgage originations were horrible, down 65% y/y.

- Yahoo gained around 8% in the premarket, extending the after-hour gains seen yesterday evening, however the name has given up some territory mid-morning to trade +6%. While Yahoo's metrics were modestly positive, it was the Alibaba disclosures ahead of the Chinese firm's IPO that really juiced YHOO. Alibaba made $1.4 billion in profit for its fourth quarter, more than double the amount it made during the same period a year earlier. Intel met expectations and modestly boosted its FY14 margin outlook. Shares of INTC are flat this morning. 

Looking Ahead

- 11:30 (US) Fed's Lockhart gives closing remarks on Financial Markets
- 11:30 (BR) Brazil Weekly Currency Flows
- 12:15 (US) Fed's Yellen speaks to Economic Club of New York
- 13:25 (US) Fed's Fisher speaks on the Economy in Austin, Texas
- 14:00 (US) Fed Beige Book
- 20:30 (JP) BOJ Gov Kuroda speaks at Branch Managers' Meeting