Market movers today
German IFO and US new home sales will be the main data to watch.
We look for a small rise in the German IFO, pointing to continued robust growth in Germany. The short-term indicators have been a bit mixed in Germany lately. The ZEW index, factory orders and OECD leading indicator have softened a bit, whereas yesterday's PMI showed a rise in the composite new orders index. It is likely that manufacturing is taking a small breather as export conditions worsened earlier this year on the back of the slowdown in the US and China. The strong euro has also caused some headwind for exporters. However, the domestic economy in Germany is strengthening, which compensates for the export headwinds.
US new home sales are expected to rise 10% m/m in April but this follows a big drop in March. Overall the housing slowdown seems to be stabilising as witnessed by higher existing home sales as well as stronger building permits recently. The negative impulse from rising mortgage rates last year may now be fading leading to a gradual recovery of housing again after 2-3 of quarters of weakness.
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