G3 Recap 5-25-11

Main Items:

  • US Durable Goods Orders ex Transportation declined to -1.5% in April vs +0.5% expected and 1.3% previously. The prior month’s print was revised higher to +2.5%. Nondefense, Ex air Capital Goods Orders declined -2.6% MoM vs -2.1% expected and +3.7% previously.
  • The Chinese power shortage story is getting more press: NYT


  • UK 1Q GDP 2nd revision was unchanged, but private consumer was revised to -0.6% vs 0.1% expected and -0.3% previously, and Gross Fixed Capital Formation declined to -4.4% vs +1.0% expected and -1.8% previously. The difference was made up in better government spending and net exports.
  • German GfK Consumer Confidence declined to 5.5 in June vs 5.6 expected and 5.7 previously


  • Multiple expectations downgrades over the past couple days. Both GS and JPM downgraded US growth forecasts yesterday. BAML pushed back their forecast for the 1st BoC hike. GS revised their Q2 Canadian GDP forecasts down. Belgian National Bank business confidence fell sharply in May against expectations. Kocherlakota also lowered his growth estimate for the year.
    It appears the market is currently discounting the weak macro data on supply disruptions out of Japan. While that has certainly been a factor, the fact that median growth expectations remain high suggests that the balance of risks remains on the downside.