Mountains of Data to Absorb – Currency Thoughts

Mountains of Data to Absorb

May 30, 2025

Typical of the final business day of the calendar month, a great many data reports around the world have arrived. In addition, investors have again been whipsawed by fresh tariff news.

It took only a matter of hours after yesterday’s U.S. Court of International Trade’s ruling against many of the Trump Administration’s tariff hikes for a Federal Appeals Court to impose a temporary stay on that earlier ruling, which for now leaves the tariffs intact. Moreover, both Treasury Secretary Bessent and, in less diplomatic language, President Trump conceded an impasse in the latest U.S. trade talks with China.

U.S. stock futures fell about 0.4% prior to Friday’s opening bell. In the Pacific Rim, share prices lost 1.2% in Japan, 0.8% in South Korea, and 0.5% in Singapore and China. European stock exchanges are flat to moderately higher.

The dollar has risen somewhat against most other major currencies. A 0.2% drop relative to the yen is a notable exception.

Among ten-year sovereign debt yields, the U.S. Treasury is unchanged, key European yields are 1-2 basis points firmer, while the Japanese JGB slipped back three basis points today.

Oil and gold prices are a tad lower, while Bitcoin shows hardly any net change on the day.

Today’s most encouraging data news came from the U.S. Commerce Department’s monthly report on personal income and spending and specifically the PCE price deflators that happen to be the most influential inflation gauges on Fed policy. In spite of continuing tariff chaos, the overall PCE deflator only rose 0.1% in April after March’s no change, and the year-on-year increase slowed to a 7-month low of 2.1%. Core PCE inflation, which excludes food and energy fell to a 49-month low of 2.5% from 2.7% in March and 2.9% in February. Personal consumption grew only 0.2% in the latest month, slowest since January, but personal income rose 0.8%.

Other U.S. data releases this Friday showed a much greater-than-projected decline in the merchandise trade deficit to $87.6 billion in April from March’s record high $162 billion. Even so, the year-to-date trade gap of $588 billion was wider than that which accrued over the first four months of 2024. The U. Michigan index of consumer sentiment in May was revised lower to a 35-month low of 50.8 from 43.4 estimated earlier in the month and a reading of 74.0 last December. This was a surprise, contradicting the improved mood reflected in the Conference Board figure earlier this week. Another disappointment today was the 34-month low reading in the Chicago regional purchasing managers survey of manufacturers.

GDP figures from the first quarter were reported today for several economies.

• Canadian GDP expanded 2.2% at an annualized rate from the 4Q 2024 level and was up by a similar 2.3% versus a year earlier. That’s up from year-on-year growth of just 0.6% between the first quarters of 2023 and 2024.
• Italian GDP growth was confirmed at 0.3% (not annualized) and a 5-quarter high of 0.7% year-on-year.
• Turkish GDP expanded 1.0% last quarter but posted the smallest year-on-year advance (2.0%) in 19 quarters.
• In India, on-year GDP growth of 7.4% after 6.4% in the final quarter of 2024 exceeded expectations and was its highest in a year.
• Polish GDP contracted 0.5% last quarter, shrinking the on-year pace by 1.2 percentage points to just 1.6%.
• Quarterly growth in the Czech Republic of 0.8% (most in 13 quarters) yielded on-year growth of 2.2%, most in 9 quarters.
• Portuguese GDP declined 0.5% last quarter, trimming year-on-year growth to a 3-quarter low of 1.6%.
• Brazilian GDP accelerated sharply to 1.4% from 0.2% in the prior quarter, but on-year growth there of 2.9% was the slowest in a year.
• Icelandic GDP expanded 1.4% on quarter and 2.9% on year.
• Between 1Q 2024 and 1Q 2025, GDP in Latvia and Estonia each fell by 0.3%.

German consumer price inflation in May held steady at April’s six-month low of 2.1%. Service sector inflation subsided a half percentage point to 3.4%, and core inflation that excludes food and energy printed 0.1 percentage point lower at 2.8%.

Producer price inflation last month decelerated to a 4-month low of 2.6% last month in Italy, a 4-month low of 12.3% in Bulgaria, a 3-month low of -0.2% in Austria.

In Sri Lanka where consumer price inflation had previously swung from +67.4% in September 2022 to -4.2% this past January, the reading of -0.7% in April represented an 8-month high. Producer prices in the latest month were 1.1% lower than in April 2024.

The M3 stock of money in the euro area posted a larger 3.9% year-on-year advance in April, and bank lending to households (+1.9%) and non-financial firms (+2.6%) also exceeded their March readings.

Japanese data releases today revealed a 0.9% relapse in Industrial production associated with only a 0.7% rise compared to April 2024. April’s level was unchanged from the first quarter average level. Retail sales, in contrast, rose 0.5% on month and 3.3% on year, the most in three months. Japan’s jobless rate last month was 2.5% for a second straight time, continuing the pattern of either 2.4% or 2.5% since last August. Core consumer price inflation in Tokyo (excluding fresh food) accelerated to a 28-month high of 3.6%. When also excluding energy, Tokyo inflation of 2.0% was at a 14-month high. Japanese housing starts in April were 26.6% fewer than a year earlier, but construction orders posted their best increase (52.7%) in 9 months.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Canadian and Italian GDP, German CPI inflation, Trump’s comment on trade talks, U.S. personal consumption and PCE price deflator

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on Friday, May 30th, 2025 at 7:34 am and is filed under New Overnight Developments Abroad – Daily Update.
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