US economic reports were mixed to a bit weaker than expected yesterday, but probably don’t move the needle much on the US outlook, according to Greg Gibbs, Analyst at Amplifying Global FX Capital.
Key Quotes
“The Fed Beige book sounded more upbeat in May than April. It pointed to some tightening in labour market conditions and firmer price pressures. Although certainly not ringing any alarm bells that inflation pressure is picking up too much.”
“Weekly mortgage applications have eased for 5-weeks in a row, perhaps indicative of rising mortgage rates, although the series is still broadly in a rising trend.”
“The ADP employment report rose 178K, less than 190K expected, and revised down from 204K to 163K in April. The three-month average for ADP employment growth is 180K in May.”
“The market median forecast for Friday’s non-farm payrolls report is for an increase of 190K in May (after a rise of 168K in April).”
“At the margin, the ADP report may dampen expectations for Friday’s payrolls. But the market may presume any slowing in jobs growth may be more indicative of tightening supply of available workers, and the focus will be on the unemployment rate and wages, along with other metrics on available workers, including broader U6-underutilization rate.”
“The US GDP Q1 was revised down to 2.2%q/q SAAR from 2.3%, although the mix in the data was more encouraging with stronger business investment and lower inventory accumulation.”
“Business investment contributed 1.1% q/q SAAR to GDP growth in Q1, the largest amount since Q3-2014, continuing a strong pattern for a 5th quarter in a row.”
“After a weaker than average Q1, continuing a pattern of low Q1 outcomes over recent years, partial indicators are pointing to much stronger GDP growth in Q2. The Atlanta Fed Nowcast is at 4.0%. The New York Fed Nowcast is at 3.0%, and St Louis Fed Eco News index is projecting a 3.6%.”
“However, the core PCE in the GDP report was revised down from 2.5% to 2.3% q/q SAAR in Q1. The April PCE inflation data is due tomorrow, and should reflect some downward revision in recent data. The market is looking for a 1.8%y/y result for core PCE in April.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.