A quick review of the issues and events driving the markets this past week... and what's on tap for the week ahead.

Weekly Market Snapshot

May 4, 2015

"Inflation [will] rise gradually...as the labor market improves further and the transitory effects of declines in energy and import prices dissipate."

— The FOMC's expectations on the course of the US economy (April 29, 2015)

The week in review...


US slowdown: On display The FOMC deemed the factors impeding growth "transitory", but the effects were clearly visible: estimated GDP growth for 1Q2015 was solidly disappointing at a 0.2% annualized rate; consumer confidence unexpectedly reached a 4-month low; personal income was flat for March; home prices rose at a moderate 4.2% for the 12 months ended in February.

The Fed's focus: Data, not dates April's FOMC statement made a noteworthy omission: no estimated time horizon for its closely-watched decision to raise rates. That's an important milestone in the Fed's effort to get financial markets to focus on the ebb and flow of economic information, rather than the Fed's own policy process. The stated goal: maximize the ability to make decisions on short notice, should circumstances require – with as little market disruption as possible.

Venezuela: Dollars for gold The country's central bank has swapped 1.4 mn troy ounces of gold – the equivalent of 3,500 gold bars – for about $1 bn in cash, according to reports. The country's current economic crisis, with inflation at upwards of 150% and its foreign currency reserves hitting an 11-year low of $19 bn in April, has left it unable to pay for food, medicine and other basics.


Eurozone commercial lending: signs of life Bank loans to the private sector rose for the first time in three years. Excluding loans to banks, lending rose 0.1% in March compared to a year earlier – the first annual increase since March 2012. Proponents of the ECB's QE program credit the addition of billions of euros into the banking system for the increased willingness of Europe's banks to lend.

Eurozone consumer prices: Deflation on the run? April consumer prices remained stable, after falling 0.1% in March. Excluding energy, food and tobacco, prices actually rose 0.6%.

UK growth: Timing is everything GDP grew at a disappointing 0.3% in 1Q2015, compared to 4Q2014, just half the rate of the previous three months, the weakest reading since 4Q2012. The lackluster showing adds to the challenge faced by Prime Minister David Cameron's Conservative Party and its claim to be better placed to encourage growth than the opposition Labour party ahead of the coming election on Thursday, May 7.


Industrial companies: under pressure Profits at China's industrial enterprises fell for the sixth month in a row in March, falling 0.4% year-on-year, adding to the pressure on corporate bonds to avoid defaults. Total profits for 1Q2015 were 1.25 tn yuan ($204 bn), down 2.7% year-on-year. Last year, industrial profits rose 3.3%.

Signs of the times:

China rail group signs $5.5bn in Africa deals – Financial Times

Greece scrapes together pension payments – Financial Times

Oil Plunge, Royal Handouts Trigger Record Drop in Saudi Reserves – Bloomberg

Consumer Confidence At Decade High But Britons Save Rather Than Splurge – Telegraph

Labor Costs Climb, Raising Hopes of Wage Growth – Wall Street Journal

Sources: Bloomberg, Wall Street Journal, Financial Times, New York Times, China Daily, Xinhua, Deutsche Welle, Mainichi Japan

...And the week ahead:




Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

May 3





May 4

Factory orders


Eurozone: manufacturing PMIs

China: PMIs

May 5

Trade deficit, service industries growth



Hong Kong: retail sales

May 6

Employment, productivity

Brazil: industrial production

Greece: interest payment to International Monetary Fund (IMF)
Russia: consumer prices
Portugal: unemployment
UK: Services PMI
Eurozone: services PMI

China: services PMI

May 7

Jobless claims, consumer credit,


UK: general election
Germany: factory orders
France: industrial production

Japan: monetary base

May 8

Payrolls, wholesale inventories


UK: trade balance
Germany: industrial production

China: trade data

May 9




China: inflation data


The Consumer Price Index (CPI) measures the average change in consumer prices over time in a fixed market basket of goods and services.

The European Central Bank (ECB) is responsible for the monetary system of the European Union (EU) and the euro currency.

Quantitative easing (QE) refers to a monetary policy implemented by a central bank in which it increases the excess reserves of the banking system through the direct purchase of debt securities.

Gross Domestic Product ("GDP") is an economic statistic which measures the market value of all final goods and services produced within a country in a given period of time.

Purchasing Managers Indexes (PMI) measure the manufacturing and services sectors in an economy, based on survey data collected from a representative panel of manufacturing and services firms. PMI greater than 50 indicated economic expansion; below 50, contraction.

The Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve System (the Fed) responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

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Previous Editions

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When will the Fed raise the Fed Funds target rate?


When will the Fed raise the Fed Funds target rate?

Not until 2016

Previous month Poll

Will the current wave of central bank easing jump-start the world's economies?

No - The real issues are structural - real progress on labor reform and regulatory excess will have more impact
No - Deflation is already taking hold, making monetary policy changes ineffective
Yes - The US model shows that monetary easing can help economies heal in the medium term
Yes, but it will take even  longer than it did in the US, and the delay will have a negative political impact