Economics reigns supreme
- Aside from US President Trump's threat of "major, major conflict" with North Korea, the market focus is on US first-quarter GDP growth. This is subject to the normal (seemingly ever-rising) margin of error with which economic data is afflicted. It is also subject to the normal "curse of Q1" – the inability of US statistics to seasonally adjust.
- Despite these problems, investors will treat today's data with a reverence that would be better directed towards the comments of economists. No matter that this is the worst quality data on growth available – it will almost certainly provoke a stronger market reaction than the more reliable future revised data releases.
- UK, Spanish and French growth numbers are due. The UK should hold onto growth, but sustainability is questioned. French growth is likely to be lackluster. Japanese economic data was mixed – stronger retail sales, weak industrial production, slightly soft consumer price inflation.
- Euro area consumer price inflation is likely to accelerate again (the German and Spanish data accelerated yesterday). The timing of Easter is messing around with the pattern of prices, but this seasonal distortion did cause ECB President Draghi to downplay otherwise noticeable inflation increases in his remarks yesterday.