Accommodating spending

Daily update

US President Trump has suggested a de facto extension of the Gulf ceasefire (to Wednesday evening, US time) but no further extension. Markets are looking to Iran’s reaction to giver credibility to the idea of negotiations. Were the US to accept some version of former US President Obama’s deal with Iran, markets (already inclined to an optimistic interpretation) would probably react positively.
European Central Bank President Lagarde lamented the challenges for policy makers, facing uncertainty about oil price levels and the duration of the war (both economically relevant). Additional uncertainty comes from structural change. China’s exports of batteries, solar equipment, and electric vehicles hit a record in March, and investment in electrification changes economic reactions in the future.
US March retail sales should show US consumers finding ways to maintain non-oil spending even as gasoline prices soared. However, the impact of higher oil prices falls disproportionately on lower income households. For now, savings and the prospect of tax rebates offers a cushion of support to spending, but (per Lagarde) the longer the war lasts, the thinner that cushion gets.
UK labor market data remains challenged by quality issues—the rise of self-employment and the side hustle is complicating interpretations too. The German ZEW poll of business sentiment is also scheduled.