If China's gargantuan credit injection was supposed to prompt a wave of global "green shoots", it failed to make a dent on Europe.

Global shares erased this week’s gains and US equity futures dropped after weak manufacturing surveys from Asia and Europe stoked renewed fears of a slowdown in global growth, adding to profit taking ahead of the long Easter weekend, while safe havens such as the dollar and treasuries pushed higher.

European markets dropped after French and German manufacturing PMIs for April showed activity continuing to contract. Germany’s DAX more than doubled losses on the day to trade 0.3 percent lower after the release of the German survey, while the pan-European STOXX 600 index was down 0.2 percent even as carmaker and food shares gained.

While activity in Germany’s services sector rose to a seven-month high in April, investors focused on the 44.5 reading for the manufacturing sector, well below the 50.0 expansion mark for the 3rd consecutive month, and missing expectations of a 45 print (up from 44.1 in March). "The reading was better than last month, but below expectations and we could see from the market report that once again it’s the core industry for Germany that’s the worry - the carmakers are struggling," said DZ Bank analyst Sebastian Fellechner.

Germany's weak manufacturing sentiment echoed a miss in the French Mfg PMI which also missed, printing at 49.6, below the 50 exp, and down from 49.7, resulting in the Eurozone PMI falling to 51.3 from 51.6, also missing the 51.8 expected, and the first data point for Q2 signalling further sluggishness. "Manufacturing continues to dampen economic activity in across the € area. Service sector growth also cooled" according to the PMI report, which indicated that if China wishes to grow Europe's economy - its biggest trading partner - it will have to launcheven more stimulus.

🇪🇺 Flash Eurozone PMI falls ⬇️ to 51.3 in April (51.6 - Mar), with first data point for Q2 signalling further sluggishness. Manufacturing continues to dampen economic activity in across the € area. Service sector growth also cooled. More: https://t.co/J5EWgDlqGw pic.twitter.com/Byo1J7CQW3 — IHS Markit PMI™ (@IHSMarkitPMI) April 18, 2019

The weak surveys out of Europe added to a weak Japanese reading on manufacturing activity, which also showed new export orders fell at the fastest pace in almost three years. The manufacturers DI in the April Reuters Tankan survey declined by 2 points from March to +8, marking the sixth straight month of decline since October 2018. The DI has also fallen rapidly, down 20 points over the past six months, and is now at its lowest level since September 2016 (+5).

Earlier in the session, Asia suffered even heavier losses, with South Korean shares leading the decline as issues with the new 2-screen Samsung phone weighed on the biggest stock in the main index.

Similarly across emerging-markets, stocks retreated from the strongest level in ten months and currencies slipped as sentiment soured, while the Turkish lira tumbled following the previous report that the Turkish central bank was misrepresenting its FX reserves. MSCI’s index of developing-market equities fell 0.6 percent from its highest close since June. Heightened unease over economic growth in Europe sapped momentum for riskier assets, with country-specific difficulties adding to headwinds from Turkey to Brazil, as investors look to a recovery in the euro against the dollar to spark new gains for riskier assets.

MSCI’s All Country World Index dropped 0.3% on the day, erasing all gains for the week after the German data, while the VIX inched up above 13 after dipping below 12 yesterday, and back to where it was at the start of the week. On Wednesday, the index had fallen to its lowest since August 2018.

Ahead of tomorrow's Easter holiday, market participants continue to eye signs of "optimistic progress" in U.S.-China trade negotiations. While yesterday the WSJ reported that Washington and Beijing set a tentative timeline for a fresh round of face-to-face meetings ahead of a possible signing ceremony in late May or early June, the market largely ignored the news as even the algos now appear saturated with daily trade headlines.

In currencies, the dollar was 0.3 percent higher against a basket of peers at 97.261. The Australian dollar was 0.2 percent lower at $0.7163, after earlier jumping to $0.7200 as traders wagered the Reserve Bank of Australia will not rush to ease rates even though the broader economy has seemingly lost momentum.

China’s yuan rose to the highest level in more than nine months after the central bank strengthened its daily fixing by the most in four weeks. The Bloomberg replica of the CFETS RMB Index, which tracks the yuan versus a basket of 24 trading partners’ currencies, edged up for a fifth straight day on Thursday. The gain came after the People’s Bank of China strengthened the yuan’s reference rate by 0.3 percent, the most since March 21, although it was in line with traders and analysts’ expectations. The central bank’s move on the daily fixing was “an indication that the authorities seem comfortable with yuan strength,” according to Khoon Goh, head of Asia research at Australia and New Zealand Banking Group. In the near term, the yuan could test the year’s high of 6.67 per dollar, he said.

PBoC is reportedly unlikely to lower RRR in the short-term after recent liquidity injections and MLF announcement, while better than expected Q1 data also means there is less pressure for a RRR cut. (China Securities Journal)

BoK kept the 7-Day Repo Rate unchanged at 1.75% as expected with the decision made unanimously. BoK said South Korea economy to grow mid-2% level this year and hover below prior projections but won't significantly diverge from potential level, while it added that exports are to recover gradually

In commodities, oil markets fell despite a surprise decline in U.S. inventories, but the price drops were tempered by a smaller-than-expected reduction in gasoline stocks and ongoing OPEC-led supply cuts.

Economic data include retail sales, jobless claims, Markit PMI readings. Philip Morris, Honeywell, American Express and Danaher are due to report earnings

Market Snapshot

S&P 500 futures down 0.2% to 2,895.00

STOXX Europe 600 down 0.2% to 388.92

MXAP down 0.5% to 163.00

MXAPJ down 0.4% to 543.65

Nikkei down 0.8% to 22,090.12

Topix down 1% to 1,614.97

Hang Seng Index down 0.5% to 29,963.26

Shanghai Composite down 0.4% to 3,250.20

Sensex down 0.07% to 39,247.89

Australia S&P/ASX 200 up 0.05% to 6,259.81

Kospi down 1.4% to 2,213.77

German 10Y yield fell 3.5 bps to 0.045%

Euro down 0.3% to $1.1260

Brent Futures down 0.4% to $71.31/bbl

Italian 10Y yield rose 1.8 bps to 2.241%

Spanish 10Y yield fell 3.2 bps to 1.074%

Brent Futures down 0.4% to $71.31/bbl

Gold spot up 0.1% to $1,275.23

U.S. Dollar Index up 0.2% to 97.24

Top Overnight News from Bloomberg

While German manufacturing slumped, France’s economy got off to an encouraging start in the second quarter, with business activity stabilizing as disruption from yellow-vest protests waned; U.K. retail sales showed the resilience of consumers in the face of Brexit uncertainty

The Turkish lira weakened the most in the world as the central bank struggles to explain recent moves in its foreign-currency reserves, fueling concern about the state of the nation’s finances amid the looming prospect of more political upheaval

The euro-area economy slipped at the start of the second quarter, with weakness in manufacturing spilling over into services

As merger talks between Deutsche Bank AG and Commerzbank AG appear to run into more obstacles, potential suitors such as ING Groep NV and UniCredit SpA are said to show interest for a piece of the German banking market

Economists are dialing down expectation of stimulus in China after upbeat economic data. UBS and Morgan Stanley have upgraded their outlook for China, though economists still expect targeted stimulus measures

Senior U.S. and Chinese officials are scheduling more face-to- face trade talks in an effort to reach a deal by early-May that President Donald Trump and his Chinese counterpart Xi Jinping could sign later that month, two people familiar with the plans said

Australian employment climbed more than expected in March, led by full-time roles, suggesting the central bank has more time to assess whether the economy needs further stimulus

North Korean leader Kim Jong Un oversaw the test-firing of a “new-type tactical guided weapon,” state media reported, in a likely signal of displeasure over stalled nuclear talks with U.S. President Donald Trump

Turkey remained gripped by a dispute over the result of a local election in Istanbul, with the authorities still considering the governing party’s claim of fraud while the main opposition was awarded victory

Japan is no longer in a state of deflation and the deflationary mindset among company executives is starting to change, Finance Minister Taro Aso says at a Japan Chamber of Commerce and Industry event

Attorney General William Barr will hold a news conference at 9:30 a.m. Washington time Thursday on Special Counsel Robert Mueller’s report, which the Justice Department has said it will release that morning

U.K house prices stagnated in March as the number of transactions plunged, according to LSL Acadata. Values were flat on an annual basis last month as falls in London and southern England offset gains elsewhere, the firm said in a report Thursday

Asian equity markets were softer with the region tentative ahead of Easter closures and following a lacklustre performance on Wall St where a continued slump across the healthcare sector weighed across the major indices. ASX 200 (Unch) was choppy with the index initially dragged lower as health stocks tracked the underperformance of their counterparts stateside, although the index later recovered amid strength in miners and energy names following quarterly updates from the likes of Fortescue Metals, Santos and Woodside Petroleum. Meanwhile, Nikkei 225 (-0.8%) was weighed by a firmer currency, while Hang Seng (-0.5%) and Shanghai Comp. (-0.4%) also traded subdued despite further liquidity efforts by the PBoC, as hopes for a RRR cut fade and as Hong Kong participants took risk off the table ahead of a 4-day closure. Finally, 10yr JGBs were higher with prices supported by the cautiousness in the region and amid mild gains in T-notes, while today’s enhanced liquidity auction for longer-dated JGBs also attracted greater demand.

Top Asian News

Singapore’s DBS Plans to Stop Financing Coal Power After 2021

HNA Unit in Singapore Pays Bond Amid Questions on Loan Default

Economists Shift China Stimulus Expectations After Upbeat Data

Samsung Electronics Gets Double Whammy, and Korean Stocks Suffer

Major European indices began the day largely unchanged, but have since traded choppy [Euro Stoxx 50 +0.3%] with bourses mixed in spite of further optimistic US-China headlines, as markets are weighed on by broader risk sentiment following the poor PMIs out of the EZ. Sectors have followed a similar transition from flat to relatively mixed this morning, although the consumer staples sector (+1.1%) is significantly outperforming its peers. Buoyed by sector heavyweight Nestle (+1.1%) after a sales update, where they beat on Q1 revenue and affirmed FY19 sales towards 2020 target levels and Unilever (+3.5%) who have confirmed progress towards FY expectations. Other notable movers this morning include Osram Licht (-3.7%) who are trading at the bottom of the Stoxx 600 after reports that Carlyle & Bain are losing confidence regarding a bid for the Co. Kering (-3.6%) are in the red post earnings in-spite of beating on Q1 revenue and reporting LFL increases in Gucci & YSL, with some pre-market commentary citing the potential for downside on the sales increase not perceived as being large enough.

Top European News

U.K. Retail Sales Surge as Consumers Defy Brexit Turmoil

German Economic Activity Improves as Services Remain Resilient

Osram Says Still ‘In Good Talks’ With Bain, Carlyle

French Minister Says Sooner the U.K. Leaves the EU the Better

In FX, it was not the best day for the EUR as it tumbled to the bottom of the G8 performers following dismal manufacturing flash readings from France, Germany and in turn, the EZ. The single currency initially experienced some volatility at the release of the French metrics, before Germany’s miss brought the first wave of material downside, later exacerbated by the disappointing EZ numbers. All-in-all, EUR/USD gave up the 1.1300 handle and fell below its 50 DMA at 1.1294 before briefly breaching the psychological 1.1250. The pair currently resides just above 1.1250, having thus far traded within a 1.1245-1305 range.

USD - On the front-foot amidst the demise of the EUR post-PMIs as the DXY marches on above the 97.000 level from an intraday low of 96.950 (high 97.333). The index did little overnight and mostly traded sideways due to thinned holiday volume alongside a lack of catalysts. The Buck will be eyeing the slew of US data in the form of weekly jobless claims, Philly Fed, retail sales and Markit PMIs later in the session.

- On the front-foot amidst the demise of the EUR post-PMIs as the DXY marches on above the 97.000 level from an intraday low of 96.950 (high 97.333). The index did little overnight and mostly traded sideways due to thinned holiday volume alongside a lack of catalysts. The Buck will be eyeing the slew of US data in the form of weekly jobless claims, Philly Fed, retail sales and Markit PMIs later in the session. GBP - A victim of the post-PMI Dollar strength after Sterling tumbled in tandem with the EUR to an intraday low, although the Pound felt some reprieve following optimistic retail sales, boosted by weather. GBP/USD currently rests below its 50 WMA at 1.3033 at the bottom of today’s 1.3010-1.3053 with potential stops just below the round figure.

- A victim of the post-PMI Dollar strength after Sterling tumbled in tandem with the EUR to an intraday low, although the Pound felt some reprieve following optimistic retail sales, boosted by weather. GBP/USD currently rests below its 50 WMA at 1.3033 at the bottom of today’s 1.3010-1.3053 with potential stops just below the round figure. AUD - Aussie jobs data did little to provide any material move for the currency, although showed an employment change of 25.7k, a jump from last month’s 4.6k, surpassing expectations of 12.0k, whilst the unemployment rate ticked up to 5.0% from 4.9%, as expected. Westpac argues that due to the conflicting signals from a strengthening labour market against weak GDP, the RBA is seemingly putting more weight on employment from a policy perspective. The analysts add that “slow growth will eventually weigh on employment growth. On this basis, along with inflation remaining low, we continue to forecast cash rate cuts in August and November”. AUD/USD saw a knee-jerk higher to test 0.7200 before most of its gains. The aforementioned Dollar strength then sent to AUD back down to fresh session lows after trading within a 0.7160-.7200 thus far ahead of its 100 DMA at 0.7140. Note: AUD/USD sees USD 1.1bln in options expiring at strike 0.7175 at today’s NY cut.

- Aussie jobs data did little to provide any material move for the currency, although showed an employment change of 25.7k, a jump from last month’s 4.6k, surpassing expectations of 12.0k, whilst the unemployment rate ticked up to 5.0% from 4.9%, as expected. Westpac argues that due to the conflicting signals from a strengthening labour market against weak GDP, the RBA is seemingly putting more weight on employment from a policy perspective. The analysts add that “slow growth will eventually weigh on employment growth. On this basis, along with inflation remaining low, we continue to forecast cash rate cuts in August and November”. AUD/USD saw a knee-jerk higher to test 0.7200 before most of its gains. The aforementioned Dollar strength then sent to AUD back down to fresh session lows after trading within a 0.7160-.7200 thus far ahead of its 100 DMA at 0.7140. Note: AUD/USD sees USD 1.1bln in options expiring at strike 0.7175 at today’s NY cut. SEK - The marked G10 underperformer amid the release of dreary unemployment numbers wherein the rate rose to 7.1% although it was expected to be maintained at 6.6%. As such, SEK failed to reap the benefits of the EUR’s weakness as EUR/SEK spiked higher to briefly breach 10.50 to the upside as before stabilising above its 50 DMA at 10.4841.

- The marked G10 underperformer amid the release of dreary unemployment numbers wherein the rate rose to 7.1% although it was expected to be maintained at 6.6%. As such, SEK failed to reap the benefits of the EUR’s weakness as EUR/SEK spiked higher to briefly breach 10.50 to the upside as before stabilising above its 50 DMA at 10.4841. JPY - The outperformer amongst the G10 currencies despite the sudden USD strength as the Yen benefits from its haven properties given after EZ PMIs somewhat soured market sentiment, although the EUR weakness may have aided the JPY through its EUR cross. USD/JPY gave up the 112.00 handle and currently rests towards middle of a 111.75-112.10 range.

In commodities, Brent (-0.1%) and WTI (-0.2%) prices have traded in-line with general sentiment this morning, with the complex taking a downturn following this morning’s PMIs with German and French Manufacturing missing expectations, as did all 3 EZ measures. Following the German data, the EUR weakened which led to some strength in the USD causing oil prices to deviate negatively from their largely lacklustre trade overnight on a lack of news flow. Looking ahead in the session due to the market holidays for Easter, the Baker Hughes will be release early today April 18th at the usual time of 18:00 BST. Gold (+0.2%) has traded largely in-line with the dollar this morning on the aforementioned PMIs. Overnight, the yellow metal fell to fresh YTD lows around the USD 1271/oz level following positive US-China news flow from President Trump stating the deal is progressing nicely alongside reports that US-China have set a tentative timeline for trade talks; with the potential for a deal to be signed as early as May. Elsewhere, Antofagasta’s Chairman stated that copper demand will be supported by the ongoing fight against climate change, as the metal is critical to electric vehicle production.

Looking at the day ahead, we’ve got March retail sales, the April Philly Fed business outlook, the latest claims data, PMIs, February business inventories and March leading index. Away from the data the ECB’s Lane and Bostic speak this morning and this afternoon respectively, while Italy’s lower house begins debating on the government’s economic forecasts. Finally the earnings highlights include Philip Morris, American Express and Schlumberger.

US Event Calendar

8:30am: Retail Sales Advance MoM, est. 1.0%, prior -0.2%; Retail Sales Ex Auto MoM, est. 0.7%, prior -0.4%

8:30am: Philadelphia Fed Business Outlook, est. 11, prior 13.7

8:30am: Initial Jobless Claims, est. 205,000, prior 196,000; Continuing Claims, est. 1.72m, prior 1.71m

9:45am: Bloomberg Consumer Comfort, prior 59.8

9:45am: Markit US Manufacturing PMI, est. 52.8, prior 52.4

9:45am: Markit US Services PMI, est. 55, prior 55.3

9:45am: Markit US Composite PMI, prior 54.6

10am: Leading Index, est. 0.4%, prior 0.2%

10am: Business Inventories, est. 0.3%, prior 0.8%

DB's Jim Reid concludes the overnight wrap

It’s my last day at work for a couple of weeks. I may need it to get over last night’s Champions League football. Never has a Liverpool game played second fiddle as much as last night. Nick Burns in my team is a Spurs season ticket holder and he’ll be unbearable today but secretly I’m very happy. Anyway I won’t have much rest on hols as two years after a random speculative visit to a house for sale - when my wife was delirious with double morning sickness carrying twins and I was swept away by it being opposite my golf club - next week we move in. We fell in love with the idea of it but maybe didn’t quite comprehend the enormity of the project despite having done a smaller scale one six years ago. After planning permission, architects, hiring builders and then 10 months of renovations we are mentally exhausted. The stress has at times been unbearable and given the state of the house last night when I went to see it it’s not over yet as the builders are working all of Easter. Given all the unforeseen costs if I were a corporate bond I would have been downgraded from solid investment grade to junk in this process. Those twins will have a lot to answer for in the years ahead. I’ll be off for the next two weeks unpacking boxes and when my wife isn't looking heading off to the first tee where I can be 2 minutes after leaving my front door. You’ll be in the safe hands of Craig and Quinn while I’m off. See you on the other side.

Talking of taking on more debt, there was a lot of talk in the market yesterday about the latest credit fuelled China growth and activity data that was out just over 24 hours ago. Well today we’ll see if the Q1 boost in activity there can make an impact on the global flash PMIs. Of special interest will be the German and Eurozone manufacturing readings. The former slumped to 44.1 last month and the lowest since 2012. That’s also in contrast to what appears to still be a fairly solid services sector with the reading over 11 pts higher at 55.4. The gap is expected to close this month with the manufacturing reading expected to nudge up to a still very weak 45.0, and the services reading to moderate slightly to 55.0. For the Euro Area the consensus is for a 51.8 composite reading which would be slightly up from 51.6 last month, helped also by a slight climb in the manufacturing sector (48.0 expected from 47.5 last month) more than offsetting a modest pullback in the services data. At some point the manufacturing numbers should see a decent bounce in Europe, after declining for 14 out of the last 15 months, but whether it’s today remains to be seen. As a minimum we should see the first “b” of bounce. All this data is out between 8.15am BST and 9.00am BST this morning.

An interesting point that our China economists made after yesterday’s numbers was that total government spending rose by 23% in Q1 despite weak revenue growth of just 3%. They note that fiscal policy was eased by a fairly eye catching 6ppts of nominal GDP in Q1. This is important as it suggests that growth is being driven by more than just monetary policy. Our colleagues now expect monetary and fiscal policy to shift to neutral in Q2 and for the rapid credit and fiscal expansion to stabilise. That actually goes against a Bloomberg story which did the rounds yesterday suggesting that China might take more steps to inject more stimulus, specifically through bolstering sales of cars and electronics. Although this may be a more targeted measure. In any case, our team no longer forecast a RRR or interest rate cut for the rest of this year. The upside surprise in Q1 has also meant that they have pushed up their 2019 growth forecast from 6.1% to 6.3% although still expect a slowdown in H2 as fiscal support slows in line with revenue constraints. More in our colleagues report here.

That Bloomberg story about China bolstering sales of cars and autos – combined with another big rally for Qualcomm - actually saw the NASDAQ 100 close at a new all-time high after gaining +0.34%, while the full NASDAQ index fell -0.05% despite opening the session higher. There was a similar course of travel for the S&P 500 which ended -0.23% after a brighter start. After tepid moves on Monday and Tuesday, the S&P 500 has traded in a range of +/-0.78% over the last three sessions, the second narrowest of the year. Healthcare names struggled again yesterday with the sector dropping -2.89% as the fallout from concerns about “Medicare for All” continued. The sector has now lost -6.61% this month which compares to a +2.33% gain for the S&P 500.

Health care was also a drag in Europe however the STOXX 600 still eked out a +0.10% gain by the end of play as autos and banks rallied. The index is now at its highest level since August and back to within 5.91% of the all-time high from 2015. Just on autos, the sector gained +1.62% following that China story and is now up for five sessions in a row. European Banks rose +0.88% and are now at the highest since October as core European yields rose, with 10y Bunds up to 0.078% (+1.4ps). Treasuries ended little changed at 2.592% - although are down a couple of basis points this morning - while in commodities we saw copper rally +0.94% to reach the highest level since July.

This morning in Asia bourses have followed the S&P lower with the Nikkei (-0.68%), Hang Seng (-0.58%), Shanghai Comp (-0.23%) and Kospi (-1.06%) all in the red. The latter appears to be underperforming on the back of news that North Korea has tested a new “tactical weapon” according to state media. Sentiment more broadly in Asia also failed to get much of a lift from the news that US and China officials are aiming for an early May announcement on a trade deal, suggesting that this isn’t necessarily new news. Lighthizer and Mnuchin are expected to travel to Beijing from the week of April 29th to continue discussions. Elsewhere, in rates markets we should also note that China’s overnight repurchase rate is 16bps lower this morning having hit a headline inducing four-year high yesterday as cash supplies tightened. Longer dated 10y yields are steady this morning at 3.369% but are up over 30bps since the end of March.

Back to PMIs where we’ll also get the US flash numbers this afternoon alongside the March retail sales report. For the PMI, consensus expectations are for the manufacturing index to rise to 52.8 from 52.4, but for the services index to fall to 55.0 from 55.3. On the retail numbers, our US economists expect sales excluding autos to have climbed +0.5% mom which is slightly below the market consensus (+0.7% expected) however our colleagues also note that there may be weather related downside risk to the March numbers as well given that the so-called “bomb cyclone” event affected large swaths of the country in the middle of the month. However, the fact that the March employment report and the aforementioned auto sales data did not show meaningful weather effects indicates that this distortion may be limited. Also today, the Attorney General Barr is releasing the redacted Mueller report at a press conference at 9:30am ET/2:30pm BST which has the scope to generate headline volatility.

Retuning again to yesterday, where the latest earnings reports can only really be described as mixed. Morgan Stanley shares closed up +2.64% after beating earnings expectations but disappointing on revenues. Balancing that out were poor results from Abbot Labs (-4.61%), which beat headline expectations but failed to impress with their guidance amid the healthcare rout, and Bank of New York Mellon (-9.52%), which saw weak net interest income and fall in deposits. US Bancorp (+0.78%) posted in-line results.

In other news, the ECB’s Hansson was quoted yesterday as saying that “there are some signs of hope for the second half of 2019 at the moment”, pointing specifically to a solution between the US-China in their trade conflict. Nowotny did however also hint at it not being time to introduce tiering for the ECB. There was a similar story from MNI and combined with the recent commentary, there appears to be a bias towards the ECB not going down this route for now if it’s all is to be believed.

Staying with Europe, as expected Germany’s economy ministry slashed its forecast for 2019 growth to 0.5% with the ministry still expecting a weak first half. That matches our economists’ forecast for this year.

In the US, Philadelphia Fed President Harker reiterated his prior views in favour of one more rate hike this year followed by one in 2020. Separately, St. Louis Fed President Bullard gave a presentation in favour of nominal GDP targeting. He is one of the most dovish members of the committee, but there certainly seems to be a growing contingent of policymakers in favour of changes to the Fed’s operating framework. Later in the session, the Fed’s beige book said that there was “some strengthening” in conditions and “reports on manufacturing activity were favorable.” However, there was some “trade-related uncertainty” and “labor markets remained tight.” On inflation, prices were reported to “have risen modestly.” So nothing really new to shake the Fed’s current views.

As for the data that was out yesterday, March UK CPI was soft, as the yoy figures for headline and core inflation both missed expectations by -0.1pp, coming in at 1.9% and 1.8%, respectively. That should give the BoE some more breathing room, though the forward rates curve didn’t move much in response to the data. The retail price index rose 2.4% versus expectations for 2.6%, though PPI output rose 2.4% versus the expected 2.1%. In the euro area, March CPI was confirmed at 1.4% headline and 0.8% core, while Italy’s final print was also unchanged at 1.1%. In the US, the February trade deficit came in at -$49.4 billion, narrower than expected as exports performed strongly, rising 1.1% versus a more tepid 0.2% rise in imports.

To the day ahead now, where the obvious focus this morning in Europe is on those April flash PMIs. Away from that we’ll also get March PPI in Germany and March retail sales in the UK. The BoE’s credit conditions and bank liabilities survey is also out this morning. Meanwhile in the US this afternoon we’ve got March retail sales, the April Philly Fed business outlook, the latest claims data, PMIs, February business inventories and March leading index. Away from the data the ECB’s Lane and Bostic speak this morning and this afternoon respectively, while Italy’s lower house begins debating on the government’s economic forecasts. Finally the earnings highlights include Philip Morris, American Express and Schlumberger.