Market movers today
Yesterday's German inflation data were in line with our expectations and hence we have not changed our view that preliminary inflation data for the euro area as a whole, due for release today, will show that the euro area edged out of deflation in April. We expect HICP inflation to increase to +0.1% y/y in April from -0.1% y/y in March, mainly on the back of a less negative contribution from energy prices but core inflation is also expected to have edged slightly higher. The unemployment rate should have continued its downward trend to the lowest level since April 2012.
In the US the private consumption deflator (PCE) for March and the employment cost index for Q1 will be released. They deserve attention as they are Fed's preferred measure for inflation and wage costs. Monthly data on average hourly earnings have shown a flat trend in wage inflation in recent months but we believe that a pick-up in wage growth is imminent. We expect both core and headline PCE inflation to increase 0.2% m/m in March mirroring the development in the CPI data.
In the US we expect growth in personal spending to rebound slightly to 0.3% m/m in March reflecting the modest rebound in retail sales. Personal spending in March has already been incorporated in the first estimate for private consumption in Q1 and as private consumption was close to expectation, there will be no major surprise.
In Norway and Denmark unemployment figures are due for release today.
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