US consumer confidence falls

The US Conference Board measure of consumer confidence fell to a near five-year low in April, declining to a value of 86.0 from 93.9 in March. The print was below consensus expectations and marked the fifth consecutive decline in the measure. Underlying the headline print were falls in both the present and expected conditions sub-components. Survey respondents’ expectations for the next six months saw a particularly sharp decline, dropping to 54.4 from 66.9 in March, the lowest since 2011.

The March JOLTS report showed some signs of a cooler US labour market, with the number of vacancies declining to 7.19mn from the 7.48mn recorded in February. Consistent with President Trump’s recent policy announcements, sectors that saw the biggest declines in vacancies included transportation and warehousing, government, leisure and hospitality. The ratio of job-openings to unemployed workers fell to 1.02 in March from 1.06 in February, below levels seen prior to the Covid-19 pandemic.

The US goods trade deficit widened in March, increasing 9.6%m/m to USD162bn, likely driven by companies importing more ahead of the imposition of tariffs. The larger-than-expected figure will weigh on estimates of first quarter GDP, due to be published later today.

President Trump spoke at a rally yesterday, marking his first 100 days in office. The President renewed his criticism of Fed Chair Powell during his speech, saying he’s “not really doing a good job”. Separately, President Trump signed an executive order to reduce the impact of planned auto tariffs, including a two-year reduction in levies applied to auto parts used in US manufacturing of finished cars and trucks.

The official Chinese manufacturing PMI slipped back into contractionary territory in April, dropping to a lower-than-expected value of 49.0 from 50.5 in March. New export orders declined on the month, suggesting that tariffs are already impacting Chinese manufacturers. The non-manufacturing PMI also declined but remained above the neutral-50 mark, printing at a value of 50.4 in April from 50.8 the month prior. The Caixin manufacturing PMI, a more exporter-oriented measure of activity, also fell in April, falling to a value of 50.4 from 51.2 in March.

Today’s Economic Data and Events

• 13:00 EC GDP (Q1): forecast 1.1% y/y
• 16:15 US ADP employment change (Apr): forecast 115k
• 16:30 US GDP (Q1): forecast 0.3% q/q annualized
• 18:00 US personal spending (Mar): forecast 0.6% m/m
• 18:00 US personal income (Mar): forecast 0.4% m/m
• 18:00 US PCE price index (Mar): forecast 2.2% y/y

Fixed Income

• US Treasury yields fell further on Tuesday, driven by a weaker-than-expected JOLTS report and a drop in consumer confidence figures. Both the 2yr and 10yr yield fell around 4bps to reach 3.6499% and 4.1716%, respectively.
• There were broad-based falls in European bonds yields on Tuesday. The 10yr UK Gilt yield fell 3bps to 4.4785%, while the 10yr Bund yield declined by 2bps to 2.496%.

FX

• The dollar rallied on Tuesday on the back of a reduction in planned auto tariffs. The spot index gained 0.23%. EURUSD fell 0.3% to 1.1387, while GBPUSD declined by 0.23% to 1.3409. USDJPY gained 0.2% to 142.33.
• Commodity currencies declined against the dollar on the day. AUDUSD fell 0.7% to 0.6384 and NZDUSD declined by 0.8% to 0.5931. USDCAD remained fairly flat on the day, gaining a marginal 0.02% to close at 1.3833.

Equities

• US equity markets moved higher on Tuesday. The Dow Jones rose 0.75%, the S&P 500 gained 0.58%, and the NASDAQ increased by 0.55%.
• European equity markets were mixed on the day. The Eurostoxx 50 fell 0.17%, and the CAC 40 dropped by 0.24%. In contrast the DAX increased 0.7%, likely spurred by reports of a planned easing in auto tariffs. The FTSE 100 rose 0.55%.
• Local markets also saw gains on Tuesday. The DFM rose 0.48%, and the ADX gained 0.82%.

Commodities

• Oil futures saw a further sharp fall on Tuesday. Brent fell 2.44% to reach USD 64.25/b, while WTI declined 2.6% to reach USD 60.42/b. Reports suggest that OPEC + may elect to bring forward planned supply increases at their May 5th meeting, while the API reported a 3.8 million barrel rise in US inventories in the week ending 25 April.