Can growth hold up?

Growth conditions were at the forefront for markets this week, even though no growth data was released per se. Firstly, the IMF published its world economic outlook for April, which partially downgraded growth and flagged the downside risks of tighter credit conditions following the financial instability in March. Then came the US inflation data, which wasn’t just examined in terms of inflation persistence, but to monitor if the consumer demand outlook had faltered. Shorty after the inflation data, Fed staff signaled that a recession was their base case in 2023 in the latest edition of the meeting minutes. Finally, towards the end of the week, it was no longer US growth conditions that played the tune for markets, with Chinese data instead thrusting the reopening trade back into the limelight. While the US data calendar is sparse next week, emphasis is going to remain on economic activity, especially with the release of flash PMIs for April and China’s Q1 GDP data. 

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Authors: 

Simon Harvey, Head of FX Analysis

Jay Zhao-Murray, FX Market Analyst

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst

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