Market Pulse - The week in review - April 26th 2024

THIS WEEK’S RECAP:

 

▪ US real GDP growth for 1Q24 was 1.6% annualized. This fell short of the consensus estimate (2.5%). Nonetheless, real final domestic demand growth was much stronger at 2.8% annualized. Strong contributions came from real personal consumption suggesting consumer resilience has persisted. The monthly data for March corroborated this and implies a strong handoff for 2Q. Encouragingly, cyclical components of the economy (such as single-family housing) also continued to show an improvement suggesting US economic growth is likely to remain resilient.

 

▪ US core Personal Consumption Expenditure (PCE) inflation for March came in line with consensus expectations at 0.3% MoM. Nonetheless, inflationary pressures remain elevated supporting the view that the interest rates are set to stay higher for longer. Indeed, the Fed’s preferred inflation metric, core services excluding housing, was +0.4% MoM, implying a pace of inflation well above the Fed’s 2% target

 

▪ Evidence that the Canadian consumer is losing momentum was apparent in this week’s retail sales report. Nominal sales data for February was weak at -0.1% MoM, falling below consensus expectations for a +0.1% gain in the month. Discretionary spending was soft with weakness particularly apparent in housing related categories such as electronics and appliance retailers and furniture stores. Statistics Canada’s preliminary estimate for March suggested flat growth in the month, pointing to a weak handoff for 2Q24.

 

▪ The Bank of Japan (BoJ) left their target range for the overnight rate unchanged at 0% to 0.1% and decided to continue its current pace of purchases. Updated forecasts revealed a softer growth outlook for FY24 while the outlook for core inflation was left unchanged. The JPY has weakened further following the meeting. Notably, BoJ Governor Ueda stated that exchange rate movements had not had a significant impact on underlying inflation so far.

 

▪ Earnings season kicked up a notch with 157 of the S&P 500 firms reporting in the week. The overall index was up ~3% from Friday’s close. The US 10-year yield continued to move higher as US inflation data remained firm and market pricing for 2024 Fed cuts fell slightly lower in the week.

 

 

ON DECK FOR NEXT WEEK:

 

▪ The Federal Open Market Committee (FOMC) decision on Wednesday will be in focus for next week. We expect the fed funds rate to be left unchanged. There will be no update to the Summary of Economic Projections, but we expect both statement language and Chair Powell will take on a slightly more hawkish tone, as has been apparent in the weeks following the March FOMC.

 

▪ US employment data for April is due on Friday. Several other key measures will also be updated next week: Employment Cost Index for 1Q24 (Tues), the ISM manufacturing index for April (Wed), JOLTS job openings for March (Wed), and the ISM services index for April (Fri). ▪ Canada GDP data for February and the preliminary estimate for March will be released on Tuesday.

 

▪ Eurozone 1Q GDP data and inflation data for April will both land on Tuesday. A labour market update will also be provided toward the end of the week when the unemployment rate for March is released on Friday.

 

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IMPORTANT DISCLAIMERS

 

This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. Certain statements contained in this communication are based in whole or in part on information provided by third parties andCI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document. CI Global Asset Management is a registered business name of CI Investments Inc. © CI Investments Inc. 2024. All rights reserved.