Improvement for both the US and China last week lifted the global Relative Performance Index (RPI) by 20 points to zero indicating that global data, on net, are exactly hitting Econoday’s consensus forecasts. When excluding prices (RPI-P), the index is very near zero at minus 2 to indicate that inflation outcomes are not swaying the results.
Helped by the February employment report, US data improved significantly last week lifting the country’s RPI from minus 38 to, however, a still negative minus 21 that indicates underperformance relative to forecasts. Inflation isn’t a factor as the index holds at minus 21 when excluding prices. For Canada, when excluding what have been cooler-than-expected prices, this country’s RPI-P rose from minus 6 to plus 10 to indicate a bias for outperformance in real activity, one that supports last week’s decision by the Bank of Canada not to cut rates.
In the Eurozone, recent upside surprises in the economic data were furthered last week and likewise supported the ECB’s decision to leave rates on hold. In fact, at 26 and 30 respectively, the RPI and RPI-P suggest that the first-quarter economy is running quite well ahead of market expectations.
In the UK, both the RPI (21) and RPI-P (25) remained in positive surprise territory, strengthening the case for no cut in BoE interest rates on March 21st. The country’s labour market on Tuesday of the coming week will have an important say in when forecasters anticipate the first cut in Bank Rate.
In Switzerland, slightly firmer than anticipated consumer prices last month failed to prevent another decline in the annual inflation rate and although the RPI (7) crept back above zero, it was for the first time since early-February. Indeed, even now the RPI-P (0) shows the real economy has only just caught up with expectations. Accordingly, there remains a real possibility of a rate cut from the SNB next week.
In Japan, surprisingly strong Tokyo inflation in February helped to lift the RPI (15) to its first positive reading of any real magnitude since the start of the year. Nonetheless, the real economy continues to disappoint and, at minus 9, the RPI-P shows the majority of non-inflation indicators still slightly undershooting forecasts. The mixed picture will keep investors guessing about when the BoJ will finally tighten.
China’s data improved last week but the RPI at minus 21 and RPI-P at minus 7 extended their nearly 2-month run in negative territory sustaining pressure on government authorities to provide further economic stimulus.
