Summary for the 30th of April 2019


The Fed isn’t expected to announce any new signals at the interest rate decision meeting tomorrow. At the previous meeting, the Fed has indicated that the US economic growth has slowed in the first quarter of 2019 from a solid fourth quarter 2018 pace. The GDP numbers released last week have showed that this isn’t the case. GDP growth has increase from 2.2% annualized from the fourth quarter of 2018 to 3.2% in the first quarter of 2019.

Though the details in the GDP numbers have showed that the growth is mostly due to net trade, a consequence from the early expedited imports from China in autumn last year in preparation for then expected tariffs increase. Also, the increase in inventory buildup has helped in lifting the GDP growth. Adjusted for the net trade and inventory buildup, the GDP growth is only 1.3%. The domestic demand also has slowed down, even though the data for private spending, released yesterday shows a strong increase at the end of the first quarter. The US PCE deflator has declined to 1.6% in March, from 2.0% in December, showing that inflation gives a downward surprise even though the hourly earnings has increased in 2018. All in all, the Fed isn’t expected to announce new signals in the monetary policy tomorrow.

China’s manufacturing PMI numbers released today had disappointed the market’s expectation. The NBS manufacturing PMI declined to 50.1 in April from 50.5 in March. The more important Caixin Manufacturing PMI declined to 50.2 in April from 50.8 in March. The numbers are still over 50, which means the manufacturing activities are still positive. The numbers were under 50 in December to February.

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