April 28, 2023

“All eyes will be on the US Core PCE Inflation data today, the Fed’s preferred inflation gauge, for signals of potential rate hikes beyond next week’s meeting, where a 25pb hike is widely expected. In the UK, increasing economic prospects have surged businesses’ optimism, potentially putting pressure on the BoE to continue raising interest rates.”

Sam Cornford, Partner – Head of Trading

Main Headlines

Republicans in the U.S. Senate showed no indication of avoiding the upcoming debt-ceiling crisis on Thursday, despite calls to raise the $31.4 trillion limit without conditions. Democrats also dismissed the idea of talks. The House of Representatives had approved a Republican package that increased the borrowing limit and reduced federal spending. However, with the possibility of a first-ever default looming, lawmakers from both parties remained entrenched. The House Oversight and Accountability Committee is investigating the involvement of the Federal Reserve Bank of San Francisco and other regulators in the March 2023 failure of Silicon Valley Bank. The probe was disclosed in a letter from the committee’s Republican chairman, James Comer, to San Francisco Fed President and CEO Mary Daly.

In April, British businesses’ optimism surged due to increasing economic prospects, according to a Lloyds Bank survey. This may increase pressure on the Bank of England to continue raising interest rates. Lloyds reported that the Business Barometer gauge of confidence rose to 33%, above the long-standing average of 28%, while firms’ outlook on the broader economy improved by 5 points to 28%. In other news, Pearson, a British education group, has reported a strong start to the year and is on track to meet annual guidance. In addition, the company announced plans to achieve £120 million in cost efficiencies this year.


Sterling is stronger against the Euro and weaker against the Dollar this morning. NatWest reported better-than-anticipated profits for Q1 2023, with a 37% surge in income despite inflation hurting households and the bank facing intense pricing competition for customer deposits. The bank achieved a pre-tax profit of £1.8 billion, exceeding the analysts’ average forecast of £1.6 billion and the £1.2 billion achieved in the same quarter the previous year. The Bank of Japan’s decision to maintain its ultra-easy monetary policy caused the yen to decline against major currencies, resulting in Sterling reaching its highest level against the yen in nearly six months. Despite abandoning its commitment to maintaining low interest rates, the BOJ’s move led to a broad-based drop in the Japanese currency, with Sterling surging by 1.2% to a high of 169.47, its highest since November 2022.


The Euro is weaker than most major currencies in the early morning trade. The German Preliminary Consumer Price Index report for the month is set to release later today. In the last quarter, this report has exhibited a robust positive performance, surpassing the previous forecasts with increases ranging from 0.1% to 0.3%. This is a positive development for the German markets since it largely contributes to overall inflation, however it remains to be seen if this trend will continue this month. This morning, the German Import Pricing report was released, which measures the change in price of domestically purchased imported goods. It is a crucial indicator of overall trade and market health, particularly for markets heavily reliant on imported goods. The report showed a positive trend with a 0.2% reduction from the forecast, in contrast to the 1.4% increase in last month’s report, suggesting a healthier outlook for the German markets.


The Dollar is well bid against most major currencies overnight. The quarterly Advance GDP report, which provides the most comprehensive measure of economic activity in the US, was released today. It calculates the annualized change in the inflation-adjusted value of all goods and services produced by the economy. However, it reported a 0.9% decrease from the expected value, marking a reversal from the trend of the past two quarters and suggesting a slight decline in the US GDP. On a more positive note for US Markets, the Advance GDP Price Index, which measures the annualized change in the goods and services produced in the US, was released this morning as well. It showed a more optimistic outlook, surpassing the forecast of 3.7% with a 0.3% increase. This bodes well for the future of inflation in the US.


Global stocks ceded earlier gains, as data showing economic resilience and persistent inflationary pressures cemented expectations of further interest rate hikes in the US and Europe. While Japanese stocks surged as much as 1.5%, lifted by the central bank’s decision to double down on its commitment to stimulus, Europe’s Stoxx 600 equity benchmark opened more or less flat. Futures on the S&P 500 and the Nasdaq retreated, following a rally on Thursday, with sentiment dampened by a warning from Amazon.com Inc. after the market close about cooling growth in its key cloud computing business.

Main Economic Data/Central Banks/Government (All Times CET)

7:30 a.m.: France 1Q GDP
8:00 a.m.: Germany March Import Price Index
8:45 a.m.: France April CPI
9:00 a.m.: Spain April CPI, 1Q GDP
9:10 a.m.: ECB’s Villeroy speaks
9:55 a.m.: Germany April Unemployment
10:00 a.m.: Germany 1Q GDP
10:00 a.m.: Italy 1Q GDP
10:00 a.m.: SNB’s Jordan, Steiner speak
10:00 a.m.: Poland April CPI
11:00 a.m.: Euro-Area 1Q GDP
11:45 a.m.: ECB’s Lagarde speaks
12:30 p.m.: Russia Rate Decision
2:00 p.m.: Germany April CPI
2:30 p.m.: US March Personal Income/Spending, PCE deflator
EU finance ministers and central bank governors meet in Stockholm

Corporate Events

Earnings include:
Danske Bank,
Mercedes Benz,
Eni, OMV,
Norsk Hydro,


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