One old song title by the Osmonds and an overused oxymoronic phrase may be the most apt description of what happened overnight. Thundering silence came out of the BoJ while the RBNZ was also unchanged, with both resulting in gains in their currencies – 3.0% for USD/JPY and +1.6% for the NZD. The Nikkei also responded and was down 3.6%. My fellow NZ colleagues suggest the RBNZ’s policy statement hinted at a slightly more hawkish tone – which came as a surprise to many. Such sentiments bled into Europe which was quiet in a European night lacking data with the only piece of news being an on-consensus print of German inflation of 0.1% y/y for April.

For US equities, it was a case of one bad apple in the bunch with investor Carl Ichan stating he sold his stake in Apple –  in which he owned almost 1% of outstanding stock. Ichan said his decision to sell was more due to “China’s attitude” toward the company, although it does follow Apple’s worse than expected earnings which were reported on Tuesday. That was enough to offset the better than expected earnings by other technology companies such as Facebook. Even vastly above-consensus earnings by Amazon which saw its shares surge after reporting net income of $1.07 a share (well above the $0.57 consensus) could not reverse the decline. The net result was that US equities were 1.0% lower overnight.

Data wise, US GDP came in below consensus at an annualised 0.5% rate, below the 0.7% consensus but similar to the 0.6% rate indicated by the Atlanta Fed’s GDPNow measure. There was little reaction in bonds initially, and while yields did drop by 3bps this appears to have occurred after a strong 7-year bond auction. Also playing against the grain was the stronger than expected core PCE deflator which rose at a 2.1% rate – the fastest increase since Q1 2012 (Chart 1). This could suggest some upward risk to tomorrow’s March monthly PCE numbers.

The weaker US GDP numbers may have contributed to the weaker USD dollar, with most advanced currency pairs appreciating. The Euro is up 0.3% at US$1.1354 with AUD/USD also 0.4% higher at US$0.7623. Despite a consolidation in crude oil, the Canadian dollar bucked the trend and was 0.4% lower.

Crude oil consolidated recent gains with WTI rising 0.8%. Rumours continue of a possible future agreement by oil producers with Interfax reporting that Russia may take part in OPEC’s June meeting.

Coming Up

A quiet day ahead for Australia with Private Sector Credit at 11.30am and the RBA’s Debelle speaking at 12.45pm on “Developments in Global FX Markets and Challenges in Currency Internationalisation from an Australian perspective”. Both are unlikely to be particularly market moving. For Credit NAB looks for a 0.6% m/m rise, a similar pace of growth to last month, with business credit expected to continue its pick-up it has been experiencing since mid 2015.

Internationally the focus will be on inflation, with US PCE and Eurozone CPI. Your scribe’s parsing of Wednesday’s Fed Statement suggests the FOMC still sees some downside risks to inflation with the Statement deleting the words inflation “picked up in recent months” and perhaps heeding the concerns of the ‘several’ participants that were identified at the previous meeting (as revealed in the March Minutes). While the correlation with the CPI suggests a lower read than last month, last night’s quarterly core PCE deflator may imply a bigger March m/m number than expected (either that or revisions to Jan and Feb).

Overnight

On global stock markets, the S&P 500 was -1.00%. Bond markets saw US 10-years -2.83bp to 1.82%. On commodity markets, Brent crude oil +1.25% to $47.77, gold+1.5% to $1,269, iron ore +3.0% to $62.90. AUD is at 0.7626 and the range was 0.7576 to 0.7658.

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• Markets Today: 29 April 2016 (PDF, 1MB)

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