The Week Ahead: Highlights

US Preview

Beige Book in Focus as Recession Worries Rise

By Teresa Sheehan, Econoday Economist

The highlight of the April 21 week could well be the Fed's Beige Book at 14:00 ET on Wednesday. The next report will reflect conditions across the 12 districts roughly from the end of February through mid-April. The prior report released in early March showed a steep and abrupt turn to only 4 districts reporting expansion - that was mostly characterized as slight to moderate - after all districts seeing economic growth at the end of 2024. This is the sort of change that can presage a recession. If conditions continue with under 2/3 of the districts reporting no or slowing activity, it will be clear that the US economy is suffering an economic shock from the actions coming out of the White House in its campaign to remake the federal government and alter fiscal policy at top speed.

Fed Chair Jerome Powell has recently said that if you want to know what is happening in the US economy, "you should read the Beige Book". It is anecdotal evidence, but it is compiled from business contacts across the 12 districts and is more current than many of the hard numbers. It provides important context for the current economy. If conditions remain weak, the FOMC will have to consider heightened recession risks when setting policy at the May 6-7 meeting.

Also in the upcoming week are data on sales of new single-family homes at 10:00 ET on Wednesday and existing homes at 10:00 ET on Thursday. Sales of homes are likely to pick up in March as the moderation in mortgage rates from the January peaks will improve home affordability while price increases are also moderating with greater supply on the market. However, rates are on the rise again starting in mid-April and could cool future sales at a time when consumers are highly uncertain about the economic outlook, inflation, and job security.

Europe Preview

European Reports to Provide First Solid Direction Since Imposition of Tariffs

By Marco Babic, Econoday Economist

Although it's a shortened week in Europe due to the Easter holiday on Monday, the scheduled indicators will provide some of the first concrete data for assessing the economic landscape, notably Germany's closely-watched Ifo index on Thursday.

In March, business expectations for Germany increased as did current conditions, putting the overall index at 86.7 after 85.3 in February. With last week's release of the ZEW index for April, all bets are off.

The ZEW report, which measures professional investor sentiment, saw the expectations index plunge to minus 14 from 51.6 in March, the biggest decline since Russia's invasion of Ukraine. This significant decline was attributed directly to the erratic upheaval in the US trade policy.

It's more than reasonable to expect a similar decline for the Ifo expectations index. In March of 2022, the index fell to 83.2 from 98.1, and continued to decline, mirroring the ZEW results.

Purchasing Manager's reports for France, Germany, the UK, and Eurozone are reported Wednesday. Currently France is the only one of the economies with a composite index reading below 50 (48), the point above which marks expansion. The other three economies' readings are all above 50, bolstered by their service sectors. All four have manufacturing levels below 50, so even a modest pullback in services could push the composite results into contraction.

On Monday, consumer confidence for the Eurozone will be released for April. In March, consumers were more negative than the previous month, with the index falling to minus 14.5 from minus 13.6. Nothing has transpired in the past month that is likely to have bolstered buyers' views.

Another piece of the puzzle is French business sentiment on Friday. In March, the business climate index fell to 96 from 97 the previous month, indicating a fragile environment as the readings remain below their historical average of 100.

Asia Preview

India PMI to Give Early Read on Tariff Effects

By Brian Jackson, Econoday Economist

The Asia-Pacific data calendar is relatively quiet next week. Australia and New Zealand have public holidays at the end and the start of the week and most indicators scheduled for publication are still pre-dating the escalation of global trade tensions and market volatility seen in recent weeks. The exception is the flash estimate for the India PMI survey, which will provide the first indication of conditions in April.

Singapore will publish inflation and industrial production data for March and South Korea will publish GDP data for the first quarter of the year. Chinese authorities are also scheduled to announce the monthly update for the loan prime rate, with no change expected after the publication of monthly activity data last week showing improved conditions in March.

The Week Ahead: Econoday Consensus Forecasts

Monday

China Loan Prime Rate for April (Mon 0900 CST; Mon 0100 GMT; Sun 2100 EDT)

Consensus Forecast, 1-Year Rate - Change: 0 bp

Consensus Range, 1-Year Rate - Change: 0 bp to 0 bp

Consensus Forecast, 1-Year Rate - Level: 3.10%

Consensus Range, 1-Year Rate - Level: 3.10% to 3.10%

Consensus Forecast, 5-Year Rate - Change: 0 bp

Consensus Range, 5-Year Rate - Change: 0 bp to 0 bp

Consensus Forecast, 5-Year Rate - Level: 3.60%

Consensus Range, 5-Year Rate - Level: 3.60% to 3.60%

Forecasters see no change in the LPR at the 1-year at 3.10 percent or 5-year tenor at 3.60%.

United States Leading Indicators for March (Mon 1000 EDT; Mon 1400 GMT)

Consensus Forecast, M/M: -0.5%

Consensus Range, M/M: -0.7% to -0.3%

LEI expected to weaken to minus 0.5 percent in March after a decline of 0.3 percent in February. The US outlook appears increasingly gloomy as tariff uncertainty weighs heavily.

Tuesday

Eurozone EC Consumer Confidence Flash for April (Tue 1600 CEST; Tue 1400 GMT; Tue 1000 EDT)

Consensus Forecast, Index: -15.1

Consensus Range, Index: -16.0 to -15.0

Consumer confidence continues to trend down since US elections in November. Now the impact of Trump's "liberation day" tariff announcement on April 2 will start to show up. Forecasters see the index falling again to minus 15.1 in the April flash from minus 14.5 in March.

United States Richmond Fed Manufacturing Index for April (Tue 1000 EDT; Tue 1400 GMT)

Consensus Forecast, Index: -5.0

Consensus Range, Index: -7.0 to -4.0

The Richmond Fed manufacturing index is expected to show slightly faster contraction in April. After the big miss on the Philly Fed index at minus 26.4 in April versus the expected positive 6.7, risk is to the downside.

Wednesday

Singapore CPI for March (Wed 1300 SGT; Wed 0500 GMT; Wed 0100 EDT)

Consensus Forecast, Y/Y: 1.1%

Consensus Range, Y/Y: 1.0% to 1.1%

CPI is expected to rise 1.1 percent from a year ago versus 0.9 percent last month.

Germany PMI Composite Flash for April (Wed 0930 CET; Wed 0830 GMT; Wed 0430 EDT)

Consensus Forecast, Composite Index: 50.8

Consensus Range, Composite Index: 48.2 to 51.0

Consensus Forecast, Manufacturing Index: 48.0

Consensus Range, Manufacturing Index: 45.0 to 49.0

Consensus Forecast, Services Index: 50.3

Consensus Range, Services Index: 49.0 to 50.7

The composite is expected marginally positive but weaker at 50.8 in the April flash, down from 51.3 in the March final. Manufacturing is seen at 48.0, down from 48.3, and services at 50.3, down from 50.9. More declines are likely, reflecting the trade shock.

Eurozone PMI Composite Flash for April (Wed 1000 CEST; Wed 0800 GMT; Wed 0400 EDT)

Consensus Forecast, Composite Index: 50.4

Consensus Range, Composite Index: 45.9 to 50.6

Consensus Forecast, Manufacturing Index: 47.5

Consensus Range, Manufacturing Index: 45.9 to 49.0

Consensus Forecast, Services Index: 50.5

Consensus Range, Services Index: 49.0 to 50.7

With the tariff shock starting to be felt, the composite flash is expected at 50.4 versus 50.9 in the March final. Manufacturing is expected down at 47.5 versus 48.6. Services is seen at 50.5 versus 51.0.

United Kingdom PMI Composite Flash for April (Wed 0830 BST; Wed 0930 GMT; Wed 0330 EST)

Consensus Forecast, Composite Index: 50.5

Consensus Range, Composite Index: 50.2 to 50.9

Consensus Forecast, Manufacturing Index: 44.0

Consensus Range, Manufacturing Index: 44.0 to 44.3

Consensus Forecast, Services Index: 51.8

Consensus Range, Services Index: 51.0 to 52.0

The consensus sees the composite at 50.5 in the April flash versus 51.5 in the March final. Manufacturing is expected at a very contractionary 44.0 versus 44.9, and services at 51.8, down from 52.5.

United States PMI Composite Flash for April (Wed 0945 EDT; Wed 1345 GMT)

Consensus Forecast, Manufacturing Index: 49.4

Consensus Range, Manufacturing Index: 48.5 to 49.5

Consensus Forecast, Services Index: 52.5

Consensus Range, Services Index: 51.0 to 53.5

Trade worries are hitting now with the PMI manufacturing expected to contract at 49.4 in the April flash, down from 50.2 in the March final. Services is expected to continue expanding at 52.5 versus 54.4 in March.

United States New Home Sales for March (Wed 1000 EDT; Wed 1400 GMT)

Consensus Forecast, Annual Rate: 682K

Consensus Range, Annual Rate: 650K to 700K

Home sales are seen improving again to a 682,000 annual rate in March after rising to 676K in February.

Thursday

South Korea GDP for First Quarter (Thu 0800 KST; Wed 2300 GMT; Wed 1900 EDT)

Consensus Forecast, Q/Q: 0.2%

Consensus Range, Q/Q: 0.1% to 0.6%

Consensus Forecast, Y/Y: 0.1%

Consensus Range, Y/Y: 0.0% to 0.8%

Growth on year is seen at a marginal 0.1 percent in Q1, down from 1.2 percent in Q4. The trade war, exchange rate volatility, and political turmoil are being felt.

Germany Ifo Survey for April (Thu 1000 CEST; Thu 0800 GMT; Thu 0400 EDT)

Consensus Forecast, Business Climate: 85.4

Consensus Range, Business Climate: 84.5 to 86.0

Consensus Forecast, Current Conditions: 85.9

Consensus Range, Current Conditions: 85.5 to 86.0

Consensus Forecast, Business Expectations: 85.5

Consensus Range, Business Expectations: 85.0 to 86.4

After the shocking drop in the ZEW investor sentiment index in April, a weak reading is expected for Ifo. The consensus looks for the Ifo business climate index to erode to 85.4 in April from 86.7 in March, and presumably the risk is for a softer number given trade war effects.

United States Durable Goods Orders for March (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, New Orders - M/M: 1.4%

Consensus Range, New Orders - M/M: 0.0% to 2.8%

Consensus Forecast, Ex-Transportation - M/M: 0.3%

Consensus Range, Ex-Transportation - M/M: -0.1% to 0.4%

Consensus Forecast, Core Capital Goods - M/M: 0.3%

Consensus Range, Core Capital Goods - M/M: 0.0% to 0.4%

More strong orders for Boeing aircraft should lift the overall number by 1.4 percent. The ex-transportation figure has been supported by front-running tariffs.

United States Jobless Claims (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Initial Claims - Level: 220K

Consensus Range, Initial Claims - Level: 214K to 225K

Claims expected to bounce back to 220K, the rough 4-week moving average, after a surprising 9K drop to 215K a week earlier. Suggests a relatively stable labor market.

United States Existing Home Sales Index for March (Thu 1000 EDT; Thu 1400 GMT)

Consensus Forecast, Annual Rate: 4.12 M

Consensus Range, Annual Rate: 4.0 M to 4.35 M

Home sales are contending with elevated mortgage rates and falling consumer sentiment. The consensus sees sales down at a 4.12 million unit rate from 4.26 million in February.

Friday

Japan Tokyo CPI for April (Fri 0830 JST; Thu 2330 GMT; Thu 130 EDT)

Consensus Forecast, CPI - Y/Y: 3.5%

Consensus Range, CPI - Y/Y: 3.0% to 3.6%

Consensus Forecast, Ex-Fresh Food - Y/Y: 3.2%

Consensus Range, Ex-Fresh Food - Y/Y: 2.6% to 3.2%

Consensus Forecast, Ex-Fresh Food & Energy - Y/Y: 2.8%

Consensus Range, Ex-Fresh Food & Energy - Y/Y: 2.3% to 3.0%

Consumer inflation in Tokyo, the leading indicator of the national average, is expected to soar in April as the price-cutting base-year effect of free high school education in the capital has waned and after the government halved its wintertime utility subsidies in March, the last of the three-month period (bills are paid from February to April). Many firms also tend to their retail prices at the April 1 start of the fiscal year, more so this year amid high wage hikes, while processed food costs remain elevated on the lingering effects of rice shortages.

The core reading (excluding fresh food) is forecast to surge to a 23-month high of a 3.2% rise on year after accelerating slightly to 2.4% in March from 2.2% in February. The year-on-year rise in the total CPI is expected to jump to a 25-month high of 3.4% after inching up to 2.9% from 2.8%. The annual rate for the core-core CPI (excluding fresh food and energy) is estimated at a 14-month high of 2.8%, also up sharply from 2.2% the previous month.

In April 2024, consumer inflation in central Tokyo's 23 wards decelerated much faster than expected (the core CPI annual rate slowed to 1.6% from 2.4% in March) as completely free high school education took effect in the Tokyo metropolitan area, pushing down the CPI by 0.51 percentage points. The national government had been providing subsidies to slash high school tuition fees but the Tokyo prefectural government added its own financial support, removing the upper limit on household income from eligibility conditions and effectively making all public and private tuition free for grade 10 to 12 students.

Singapore Industrial Production for March (Fri 1300 SGT; Fri 0500 GMT; Fri 0100 EDT)

Consensus Forecast, M/M: 0.4%

Consensus Range, M/M: 0.4% to 1.1%

Consensus Forecast, Y/Y: 7.8%

Consensus Range, Y/Y: 6.8% to 7.8%

Output is seen recovering by 0.4 percent on the month and 7.8 percent on year in March after dropping by 7.5 percent on the month and 1.3 percent on year in February.

United Kingdom Retail Sales for March (Fri 0700 BST; Fri 0600 GMT; Fri 0200 EDT)

Consensus Forecast, M/M: -0.4%

Consensus Range, M/M: -0.6% to -0.3%

Consensus Forecast, Y/Y: 2.0%

Consensus Range, Y/Y: 1.7% to 2.4%

Sales expected to recede by 0.4 percent on the month in March after jumping by 1.0 percent in February. The consensus looks for a 2.0 percent rise on year versus 2.2 percent in February.

Canada Retail Sales for February (Fri 1230 GMT; Fri 0830 EDT)

Consensus Forecast, M/M: -0.4%

Consensus Range, M/M: -0.5% to -0.4%

Forecasters agree with the Statistics Canada estimate calling for a decline of 0.4 percent in February after a 0.6 percent decrease in January.

United States Consumer Sentiment for April (Fri 1000 EDT; Fri 1400 GMT)

Consensus Forecast, Index: 50.5

Consensus Range, Index: 47.0 to 50.8

Consensus Forecast, Year-ahead Inflation Expectations: 6.7%

Consensus Range, Year-ahead Inflation Expectations: 6.7% to 6.7%

After an unexpectedly nasty 11 percent drop in the preliminary April reading to 50.8 from 57.0 in March, forecasters see the index relatively steady at 50.5 in the final April report. One-year inflation expectations are seen unrevised at a shocking 6.7 percent from the preliminary April report. That is up from 5.0 percent in March, 4.3 percent in February, 3.3 percent in January and 2.8 percent in December, all reflecting tariff effects.