US: Light data calendar with producer prices and consumer sentiment in focus - Rabobank

According to the analysts at Rabobank, its going to be another light data calendar today as in the US, producer price inflation is expected – according to the Bloomberg consensus – to rise to 2.4% in year-on-year terms in March from 2.2% a month earlier.

Key Quotes

“The preliminary estimate of the consumer sentiment index of the University of Michigan for April is expected to be somewhat less upbeat than in March when it stood at 96.9, but the Bloomberg expectation of 96.5 would still be high. Consumer sentiment improved considerably after the November elections, rising from 87.2 in October to 93.8 in November, and has been above 96 in subsequent months. The election of Trump has released ‘animal spirits’ that have boosted the confidence of consumers, businesses, and investors (causing the Trump rally in stock markets).”

“We agree that his plans to increase infrastructure spending, reduce taxes and slash regulation should boost economic growth. However, we have also stressed that it may be difficult to implement these plans. What’s more, the protectionist tendencies of the new administration may undermine the positive impact of the fiscal policy initiatives. First of all, raising trade barriers hurts US importers and erodes the purchasing power of US consumers who will face higher prices. Secondly, if targeted trading partners decide to retaliate then US exporters will be in the line of fire. In the end, even seemingly unrelated service industries could be negatively affected if they are located in trade-intensive regions. As far as the animal spirits are related to the success of the Trump agenda, there is considerable downside risk to confidence indices and stock prices going forward.”