UK retail sales see strong Q1 growth

UK retail sales rose 0.4% m/m in March, significantly higher than consensus expectations for a 0.4% decline on the month. The March figure topped off a robust first quarter, with retail sales growing 1.6% q/q. A decline in the April GfK consumer confidence survey, however, suggests that households may use their disposal income more circumspectly going forward, as annual energy price increases and tariffs dent optimism.

The final print of the April University of Michigan sentiment survey improved relative to the preliminary release, with sentiment likely having been bolstered after the April 9^thannouncement of a 90-day pause in higher-rated tariffs. The April value rose to 52.2, from an initial print of 50.8, but remained well below the 57.0 recorded in March. The final April print remains the weakest since 2022.

Chinese Politburo concluded its April meeting at the end of last week, with the press statement suggesting that fiscal spending would be accelerated, while monetary policy easing was still in the pipeline. Separately, Chinese industrial profits rose 2.6% y/y in March, with the boost to profits predominantly stemming from high-tech manufacturing.

Today’s Economic Data and Events

• 14:30 IN Industrial production (Mar): forecast 3.3% y/y

Fixed Income

• US Treasury yields fell on Friday. Markets had been encouraged earlier in the week – with signs of potential for a softer tariff stance on China – but in an interview aired on Friday President Trump suggested that tariffs would only be reduced if the Chinese government offered something substantial in return. The US 2yr yield fell 5bps to reach 3.748%, leaving the yield 5bps lower on a week-on-week basis. The 10yr yield also fell, dropping 8bps on the day (and 9 bps on a w/w basis) to 4.2353%.
• Major European bond yields were generally higher on Friday, with exception of the UK and Switzerland. The 10yr UK Gilt yield fell 2bps to 4.4781%, while the 10yr Bund yield gained 2bps to 2.468%.

FX

• The dollar spot index remained broadly flat on Friday, gaining just 0.09%. Both EURUSD and GBPUSD declined by just over 0.2% to 1.1365 and 1.3315, respectively. USDJPY rose 0.7% to 143.67.
• Commodity currencies were weaker against the dollar on Friday. USDCAD rose 0.07% to close at 1.3863, while AUDUSD fell by 0.2% to 0.6395 and NZDUSD dropped 0.58% to 0.5963.

Equities

• The end of last week propelled US equity markets to their second biggest weekly gain thus far this year, driven by a rebound in technology stocks. The S&P 500 rose 0.74% on the day, leaving the index 4.6% higher on a week-on-week basis. The NASDAQ gained 1.3% on the day, and 6.7% w/w. The Dow Jones saw a more marginal 0.05% gain on Friday, but still ended the week 2.5% higher.
• There were also broad-based gains on European equity markets over the course of Friday, fueled by solid earnings results and reports that China was thinking about limited tariff exemptions on US imports. The Eurostoxx 50 rose 0.8%, the CAC 40 gained 0.45%, the DAX increased by 0.81%. The FTSE 100 rose by 0.1%.
• Local markets ended the day lower on Friday. The DFM fell 0.07%, the ADX dropped 0.64% and in Saudi Arabia the Tadawul declined by 0.43%.

Commodities

• Oil futures rose on Friday. Brent rose 0.5% to reach USD 66.87/b, leaving it 1.6% lower on a week-on-week basis. WTI rose 0.4% to USD 63.02/b, but remained 2.6% lower over the week.
• Gold dropped 0.8% on Friday, to USD 3319.72/troy oz.