Macro Report

Week’s Takeaway:

Most importantly, inflation data continues to come in above expectations, while the industrial side of the economy remains on a road to recovery.


The 1Q GDP will color the week, coming in at 1.6%, well below the 2.5% median expectation. This was a negative surprise for a datapoint which had been handily beating consensus expectations, on top of that, Core PCE QoQ gave a concerning signal of prices heating up even more than the market had already anticipated. Digging in more deeply, the underlying components of GDP suggest that this may be a temporary blip on the radar. Investments and consumer spending continue to be strong, and the “miss” was the result of a reduction in inventories and a surge of imports. Likely the consequence of changing market expectations on cuts and a strong dollar.

The Core PCE YoY deflator continued the recent trend of stickier prices from CPI & PPI, printing up 2.7%, above expectations of a 2.6% increase in March. The April final University of Michigan consumer sentiment survey provided confirmation of the concerning signal that we have been closely watching, with 1-yr inflation expectations coming in at 3.2%, above the preliminary reading of 3.1%. This is the highest reading since November, and untethered expectations are a serious risk that could keep the FOMC hawkish for longer.

The remainder of the housing data for March came in as well. New home sales were up 8.8%, beating expectations of a 0.9% increase, continuing their uptrend. Pending home sales SA were up 3.4% compared to expectations of a 0.4% increase, but these figures continue to be down compared to last years levels.

Finally additional FED manufacturing surveys were released this week, with mixed results. Richmond printed up to -7, from -11, beating expectations of a -8 print, while Kansas City printed down to -8, from -7, below expectations of a -5 print. Overall, manufacturing surveys have been trending higher after last months concerning print.

Next Week’s Notes:

Next week, we will receive the release of the last April Fed Manufacturing Survey, the Dallas index, which is expected to improve from -14.4 to -11.3, as well as several key start of the month reports. The final April S&P Global US Manufacturing PMI is projected to edge back into contraction, dipping from 51.9 the prior month to 49.9, but staying steady at the preliminary results. Somewhat similarly, the April ISM Manufacturing PMI is anticipated to show a slight decline, moving from 50.3 to 50.1. These market expectations indicate a bit of stagnation in the manufacturing recovery. Additionally, the final data for March’s Durable Goods Orders and Durables Ex Transportation will become available, with the preliminary data showing growth in these areas, particularly a continual growth in transportation. In a more adjacent sector, March’s Construction Spending MoM is to be reported, and has market expectations of a rebound to 0.3% growth, a notable rise from the prior two month’s declines in spending.

There will also be an updated from the auto industry, with April’s Wards Total Vehicle Sales, which is forecasted to increase to 15.70m, a notable uptick from the last month’s decline to 15.49m.

Finally, the focus will be on the batch of labor market data released. Key figures to watch include: the March JOLTS Job Openings, expected to slightly decrease to 8725k from 8756k; April’s Change in Nonfarm Payrolls, projected to fall to 250k from last month’s 303k; and April’s Average Hourly Earnings YoY, forecasted to merely dip to 4.0% from 4.1%. Other important data points to have an eye on will be the April figures for Challenger Job Cuts YoY and the Unemployment Rate, alongside the weekly update for Initial and Continuing Jobless Claims.