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U.S. Review Modest Growth on a Broadening Base - The underlying tone of the recent economic reports remains consistent with modest economic growth. Consumer spending ended the first quarter on a solid note and spending is now on track to grow at a 2 percent pace in the second quarter. - Reports from the regional manufacturing surveys showed some weakness but the National ISM report came in stronger than expected. The nonmanufacturing survey, however, came in below expectations. - Nonfarm employment rose by 115,000 jobs in April and the unemployment rate fell 0.1 percent to 8.1 percent. Modest Growth on a Broadening Base This week's ISM report came in better than expected, rising 1.4 points to 54.8 in April, which greatly relieves fears built up from the weaker factory orders ...

Sunrise Market Commentary - Fixed Income ECB can't move global bonds - Global core bonds ended the session unchanged, as initial disappointment that the ECB wasn't more dovish dissipated fast. Today's payrolls are key and might decide whether the 6-week rally is over or has one more leg. Currencies: Major currency cross rates little changed ahead of the payrolls - EUR/USD gained temporarily during the ECB press conference as Draghi was less dovish than some in the market had expected. However, the move was technically insignificant as sentiment on risk remained fragile. Today, the payrolls are the key factor for (currency) trading. Investors might stay cautions on the euro to avoid this weekend's political event risk. The Sunrise Headlines - US Equities dropped for a ...

Spain was in focus this morning after rating agency Standard & Poor's downgraded 11 of Spain's largest banks, which comes only a few days after the agency cut Spain's sovereign rating to BBB+ with a negative outlook. The bank/ sovereign feedback loop is getting more and more toxic for Spain. Like Ireland, bad bank debts seem to lead back to the government, while Spanish banks see their capital bases eroded when Spanish bonds weaken since they hold so much domestic sovereign debt. The only 'good' news was that Spain's official GDP figures for Q1 were slightly less bad than expected. The economy contracted by 0.3% rather than the 0.4% that was forecast by the market (and announced by the Bank of Spain 2 weeks ago). It's difficult to know why there was an improvement as the bulk of the detail ...

Weekly Economic and Financial Commentary U.S. Review First-Quarter GDP Growth Slows The U.S. economy grew at a 2.2 percent annual rate in the first quarter, somewhat slower than the consensus had expected. Consumption remained the primary driver of growth as business spending slowed and the government sector continued to scale back spending. In our U.S. review section this week, we discuss the GDP report in the context of the big miss in durables and consider what it means for business spending going forward. We also look at a very small change in the Fed statement this week that reflects an improving view on the troubled housing sector. Business Spending Poised for a Slowdown? Durable goods orders for March were ugly. The 4.2 percent drop was the largest decline since the U.S. ...

China HSBC flash PMI recovers but still in contraction; Weak Aussie PPI points to rate cut; Dutch govt collapses Economic Data (CN) CHINA APR HSBC FLASH MANUFACTURING PMI: 49.1 V 48.3 PRIOR (6th month of contraction) (AU) AUSTRALIA Q1 PRODUCER PRICE INDEX (PPI) Q/Q: -0.3% V +0.5%E (first decline since Q4 of 2009); Y/Y: 1.4% V 2.2%E (lowest since Q2 of 2010) (SG) SINGAPORE MAR CPI M/M: 0.8% V 0.3%E; Y/Y: 5.2% V 4.7%E (JP) JAPAN MAR NATIONWIDE SUPERMARKET SALES Y/Y: -2.4% V +0.3% PRIOR (JP) JAPAN FEB FINAL LEADING INDEX: 96.3 V 96.6 PRELIM; COINCIDENT INDEX: 95.0 V 93.7 PRELIM (HU) HUNGARY APR ECONOMIC SENTIMENT: -19.3 V -19.0 PRIOR; BUSINESS CONFIDENCE: -9.0 V -8.1 PRIOR; CONSUMER CONFIDENCE: -48.8 V -49.9 PRIOR Markets Snapshot (as of 04:30GMT) Nikkei225 -0.1% S&P/ASX -0.2% Kospi -1.2% ...

Despite the efforts done by European officials to ease the debt crisis, worries spread in markets after the rise in Spanish 10-year bond yields to 6 percent, coming close to levels which forced Greece, Portugal and Ireland to ask for international bailouts. On the other hand, Bank of Spain published on its website that Spanish banks' borrowing from the ECB skyrocketed by nearly 50% last month. Domestic banks borrowed 227.6 billion euros in March compared to 152.4 billion euros in February. Spanish banks tapped 29% of the aggregate long-term loans offered to euro-area lenders, including the three-year long-term refinancing operation loans which were launched by the ECB since last year. Also, they borrowed more than 60% of the loans received by other euro-zone banks, according to the ...

Weekly Economic and Financial Commentary U.S. Review Housing Indicators Pulled Back, but Don't Be Alarmed This week, the economic calendar was chock-full of housing market data. While housing indicators painted somewhat of a mixed picture, with nearly all housing market indicators unexpectedly declining on the month, we continue to see real improvement. That said, much of the pullback was due to the mild winter, which likely exacerbated the seasonal adjustment process. Housing starts unexpectedly fell 1.1 percent to a 698,000-unit pace in February. January starts, however, were upwardly revised to a 706,000-unit pace, the highest level since October 2008. Housing Indicators Pulled back, but Don't Be Alarmed This week the economic calendar was chock-full of housing market data. ...

The Week Ahead Highlights Searching for the next crisis? What's driving the dollar? Europe: what happened to the LTRO? Searching for the next crisis A couple of weeks ago the market was able to shrug off the prospect of a Greek default and a sharply rising oil price. Even weak Chinese economic data didn't de-rail risky assets. However, that optimism didn't last long and last week investors removed the rose-tinted spectacles and started to worry once more about the outlook for the global economy. Last month China's growth rate was downgraded to 7.5% per year from 8%. Since China has a history of out-performing expectations this downgrade had little market impact. However, a fifth straight decline for the HSBC/ Markit manufacturing PMI survey reading and the markets are ...

Forex News and Events: Risk appetite crept back in the FX markets slowly but directional price action lacked the conviction for us to reverse our overarching bearish view. This morning traders have been focused on USDJPY with the pair comfortably above the 82.00 handle. At the BoJ policy meeting the central bank held rates at zero to 0.1% and did not increase Asset Purchase Program above the Y10 trn. The lack of action disappointed some lawmakers and international investors who were hoping for additional stimulus. The BoJ did opt for an expansion of a loan scheme, targeting growth industries by 2 trillion yen to 5.5 trillion yen. Ryuzo Miyao, the know pessimist on the board, proposed to increase the asset buying and loan scheme (proposed Y5trn additional expansion). News flow and ...