The Fed released minutes from its March meeting on Wednesday, revealing potential plans to unwind its balance sheet by selling bonds purchased during quantitative easing (QE). While it’s unclear when, how, or if this will happen, in our view, the faster policies like QE are put to rest—which inflated the Fed’s balance sheet and discouraged lending—the better. US economic data reported were positive. February factory orders rose on outsized aircraft orders. The Institute for Supply Management’s (ISM) March manufacturing Purchasing Managers’ Index (PMI) expanded for the seventh consecutive month, beating expectations on new orders, exports and employment strength. Similarly, ISM’s March services PMI expanded, though fell short of expectations. March nonfarm payrolls were weaker than estimated, adding only 98,000 new jobs. However, improving wages and unemployment at post-recession lows suggest labor markets remain broadly healthy.
Eurozone and UK March services and manufacturing PMIs expanded. February eurozone producer prices and retail sales beat expectations, rising 4.5% y/y and 1.8% y/y, respectively. In France, the presidential campaign heated up with a lively eleven-candidate debate on Tuesday. Polls show populist candidate Marine Le Pen’s support continues to fade. Elections begin later this month. Regardless of the outcome, we expect uncertainty to fall as France moves through its election cycle.
Asian economic data were light. Japan’s March manufacturing PMI saw continued expansion, though modestly below forecasts. China’s markets were closed Monday and Tuesday for a national holiday.
US economic releases are light with March consumer prices and retail data expected. China releases March trade data and consumer and producer prices. Japan releases March producer prices and February machinery orders data. The UK reports March producer and consumer prices. The eurozone reports February industrial production. US markets and Fisher Investments are closed Friday, April 14 in observation of Good Friday.
Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses a Luxembourg tax basis. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.