Quieter week reiterates generally solid fundamentals - Wells Fargo

Analysts at Wells Fargo explain that new information released this week pertaining to the housing market showed that sales of new and existing sales slipped in April after getting an early start to a very robust spring selling season.

Key Highlights:

• Durable goods orders slipped less than expected though core orders also unexpectedly declined.
• The second look at Q1 GDP was better; the economy expanded 1.2 percent rather than 0.7 percent. We still expect a solid bounce back in Q2.

Global Review

Increasingly Self-Sustaining Expansion in the Eurozone

• Sentiment indicators in the Eurozone are quite strong at present. The manufacturing PMI in the euro area rose to a multi-year high in May, and the Ifo index of German business sentiment stands at its highest level since reunification.
• That said, the actual state of the Eurozone economy does not appear to be as strong at present as the sentiment indicators would suggest. However, the expansion is becoming increasingly self-sustaining. Accordingly, we look for real GDP in the Eurozone to accelerate modestly in coming quarters.