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What's up with oil?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • We have limed into the end of the week with no Greek exit from the Euro, no default, and no collapse in global growth. True there has not been a great deal of data of significance, but let us chalk this up as an economic win.
  • Oil prices have hit a high, year to date, and start to raise some interesting issues. The move higher is a wealth transfer (from consumers to producers) and all things equal will tend to lower nominal GDP for oil consumers. The price increase is still modest, but the benefits of lower oil may be mitigated.
  • Germany's ifo business sentiment data is due, in the wake of softer sentiment from the purchasing managers' surveys. Sentiment data is generally prone to overreact to underlying economics, of course, but a stable number today would be taken as a positive in the wake of yesterday's weaker figures.
  • The volatile US durable goods orders data are due. We see weakness in the headline but a consensus gain in core capital orders. Meanwhile the data from the labour market continues to signal a strong start to the second quarter.