8 April 2019
Bassanese Bites: Beautiful Numbers – Week beginning: 08 April 2019
To paraphrase former PM Paul Keating, last week produced a fairly consistent set of “beautiful numbers” across the global economy. Key manufacturing indices in both the US and China were better than expected and suggest tentative signs of recovery due to easing trade tensions, the Fed’s dovish tilt and renewed Chinese stimulus. Service sector activity in both economies also remained at robust levels. And while US retail spending was softer than expected in February, this was more than offset by a solid upward revision to January’s report.
Of course, the most beautiful set of numbers came in the US payrolls report, with better than expected employment growth and softer than feared wage growth. At the same time, weekly US jobless claims hit a 49-year low! Not surprisingly, global equities pushed higher (the S&P 500 is now only 1.3% below its closing daily high on 20 September), and technically moved into an uptrend based on my (albeit simple) moving average rules indicated in the table above. Bond yields also popped higher after steep falls in recent weeks.
That said, there were a few negative surprises, with weakness in February German factory orders and Japan’s March quarter Tankan business sentiment survey. This either suggests some lags before the improving outlook in China and the US filters through to Europe and Japan, or perhaps even some corporate fears of “trade diversion” if China tilts toward US products to appease President Trump.
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