The Day Ahead: Equity Markets Calm After European Q1 GDP
The global stock market is relatively benign this morning, and domestic stocks look to open firmer, after Euro zone Q1 GDP rose 0.2% in the quarter, slightly faster than expected and following the prior quarter's flat reading.
Annual GDP was up 0.5%, in line with forecasts, and following a 2.2% pullback in Q4.
“Debt concerns were allayed somewhat by news of better-than-expected Q1 GDP growth in the Euro area and by Spain’s announcement to slash public sector spending and wages,” said economists from BMO in a morning note. “Even the wobbly Chinese stock market had a rare up day.”
An hour before the opening bell, Dow futures are up 44 points to 10,753 and S&P 500 futures are up 5.10 points to 1,157.30.
Light crude oil is up 0.20% to $76.52, and Spot Gold is up 2.03% to $3.77
Key Events Today:
8:30 ― The deficit in the monthly Trade Balance is expected to widen in March. Exports have been rising recently but at unsteady rates, while the rebound in imports is more indicative of a V-shaped recovery. Economists believe the widening gap will result in a gap of $41 billion in March, compared with $39.7 billion in February.
“Both domestic and foreign demand is picking up, but it’s the relative pace that will push the trade deficit to one of the highest levels since the end of 2008,” predicted economists from BBVA. “The recovery of exports to Asia, Latin America and Canada will continue to strengthen as these regions pull themselves out of the recession.”
“We expect both exports and imports to grow, but imports should outpace exports as the turn in the U.S. inventory cycle pulls in more imported materials and consumer goods,” added economists from IHS Global Insight. “We also expect the petroleum deficit to widen on higher oil prices.”
10:15 ― Eric Rosengren, president of the Boston Fed, moderates discussion on macroprudential supervision at the Atlanta Fed's annual Financial Markets Conference.
1:15 ― James Bullard, president of the St. Louis Fed, speaks on the economy to the Tennessee Dept. of Financial Institutions in Nashville.
2:00 ― The Treasury is anticipated to report a $40 billion gap in the April Budget Statement. That compares to a $21 billion deficit in April 2009. According to Bloomberg, April historically tends to show a large surplus, with the 10-year average surplus at $98 billion. Expectations for the monthly deficit range as low at $15 billion to as high as $60 billion.
“We expect the Treasury to report a budget deficit of $20 billion for April, about unchanged from last year,” said economists from Nomura. “Tax receipts have improved as activity has picked up and expenditures are no longer increasing rapidly (although the level remains high). The improving budget picture is likely to lead to further declines in Treasury debt issuance this year.”
Treasury Auctions:
- 1:00 ― 10-year Notes