There has been a full slate of US economic data today and the picture is of an economy that's still strong.
If you squint, you can see some softening but it's balanced by forward-looking optimism. Here was the slate:
- US existing home sales for February 4.38M vs 3.94M expected
- US March flash S&P Global services PMI 51.7 vs 52.0 expected
- Philly Fed March business index +3.2 vs -2.3 expected
- US initial jobless claims 210K vs 215K estimate
The services PMI was the only miss but the manufacturing number beat and the six-month ahead index surged to a two-year high.
The market wants to get behind the idea of a slowing economy and Federal Reserve rate hikes and the market wants to take Powell at his word regarding cuts but it's tough to get there without any real data weakness. That's led to a persistent sense that the Fed could delay cuts and if it delays them too long, then we get close to the election and who knows.
The result has been some US dollar buying today and it's now trading at the highs of the day. The risk that dollar bulls are against is that tomorrow we get US PCE inflation numbers and maybe the Fed has an inkling those will be soft. After all, Canadian and UK inflation this week both undershot expectations significantly.
