- Chinese trade stays subdued, GDP print this Friday
- No signs of manufacturing pick up in Europe
- US consumer remains optimistic
Asia – Chinese imports from US implode
The latest trade data from China really show how much the global trade needs tariff relief. On the surface the downward surprise is not that massive, especially for exports (-3.2% y/y, consensus -3%). But when you look on a trend (where we use a 12-month rolling sum) the data looks scary. Imports is down some 7-8% on a regular basis and the imports from US is literally imploding. Trade talks will only be beneficial if they lead to reduction of tariffs – something that still looks a remote reality.
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The Chinese trade with the US already looks worse than during the global financial crisis! Source: Macrobond, XTB Research
Key economic event this week: GDP in China (Friday, 3:00am BST)
Europe – UK output falls the most since 2013
The previous week was very optimistic in Europe – stock markets recovered strongly and the British pound soared. However, this did not correspond with the economic data. In Germany we saw tumbling orders, output and trade and manufacturing soured in UK too with the output down 1.8% y/y (the most since 2013). Obviously GBP traders are focused on Brexit and this week will be crucial here with the EC summit scheduled for Thursday and Friday. However, if the UK economy starts falling off the cliff the upside for the GBP will shrink. This is why it’s worth paying attention to the data releases this week.
GBPJPY was red hot last week. Has it moved too far too soon? Source: xStation5
Key economic event this week: UK data on labour market and inflation (Tuesday and Wednesday, 9:30am BST)
US – consumers remains optimistic
The past week wasn’t very lively when it comes to the US data and one of the more interesting print was University of Michigan report on consumer sentiment. The report showed an improved sentiment both regarding current situation and expectations. The US economy is in that peculiar spot where business (ISM indices) clearly signals problems but consumers still remain optimistic. Now the very important question is: will consumer pull out the business out of trouble or will slowing business eventually dawn on consumers? Time will tell but the longer the business slowdown lasts the bigger the chance of this second – negative, scenario.
Despite some “zig-zags” in recent month the US consumer remains very optimistic from the historical perspective. Source: Macrobond, XTB Research
Key economic event this week: retail sales (Wednesday, 1:30pm BST)
