Big Bank Earnings Strengthen Investor Sentiment: April 15, 2025

Markets are cautiously advancing as well-received earnings from some big banks offset worries related to global trade. Today’s escalation featured Beijing pausing deliveries from US plane manufacturer Boeing. But the rest of the world appears optimistic that President Trump will adopt an increasingly understanding approach to cross-border commerce, and that is serving to counter investor fears. And on another quiet day from an economic calendar perspective, traders are indeed running on the field and scooping up stocks, forecast contracts, treasuries and greenback exposure while trimming commodity holdings.

March Import Prices Barely Budge

Import and export prices were pretty flat in March, declining 0.1% month over month (m/m) for the former while remaining unchanged on the latter. Last month’s slip in import costs was led by the fuel category, which decreased 2.3%. Other areas in aggregate rose 0.1%. Export charges, meanwhile, sported a 0% m/m difference as a still agricultural component was met with a 0.1% decline in the separate aspects.

NY Manufacturing Continues to Weaken

Manufacturing conditions contracted in New York this month as inflationary pressures and declining sentiment weighed on orders and shipments alike. The headline reading of -8.1 was better than the -14.5 expectation and marked a shallower decline from March’s -20. Still, elevated uncertainty is clearly plaguing activity in the state, with firms reporting the second-highest degree of pessimism in 22 years. Costs, meanwhile, accelerated to the fastest pace in over two years.

Markets Keep Rally Going

We’re seeing modest bullishness in markets today as folks gear up for some more prominent economic data tomorrow. All major equity benchmarks are climbing with the Nasdaq 100, Russell 2000, S&P 500 and Dow Jones Industrial advancing 0.6%, 0.4%, 0.4% and 0.2%. Sectoral breadth is positive and sporting a cyclical tilt as financials, technology and communication services lead; they’re up 1%, 0.9% and 0.8%. Just 4 of the 11 components are in the red with the health care, consumer staples and consumer discretionary segments hampering overall progress; they’re lower by 0.5%, 0.5% and 0.2%. Treasurys are catching bids across the curve as the 2- and 10-year maturities change hands at 3.84% and 4.33%, 2 and 5 basis point (bps) lighter on the session. And softer borrowing costs aren’t derailing the greenback; its index is up 55 bps as technical buying at the 100 level coincides with Treasury Secretary Bessent downplaying currency and foreign bond holding concerns. The US dollar is appreciating relative to the euro, franc, yen, yuan and loonie but is depreciating versus the pound sterling and Aussie counterpart. Commodities ex-gold are getting trimmed with copper, lumber, crude oil and silver down 0.7%, 0.6%, 0.6% and 0.3% but gold is higher by 0.4%. WTI crude oil is trading at $61.10 per barrel and is being sold due to the International Energy Agency dropping its 2025 demand forecast by 730,00 barrels per day on Washington-Beijing trade tensions.

Consumer Spending Figures Due Tomorrow

Following two dismal months to start the year from a consumer spending perspective, tomorrow’s retail sales numbers for March are top of mind. Household outlays represent almost 70% of the US economy and shall last month’s figures be another disappointment, then first quarter GDP is probably going to come in negative. But the IBKR ForecastTrader prediction market and Wall Street are quite optimistic that shoppers came out in force last month, with expectations for m/m growth of 0.7% and 1.3%, respectively, as of this afternoon. The report will offer additional insight as to whether the awful confidence trends have worked their way into the hard data, because post-pandemic, they’ve gone in opposite directions, for the most part. For today, however, Secretary Bessent’s comments about equity volatility and treasury stability are serving to propel investor sentiment. But tomorrow’s reports on retail sales and industrial production, alongside developments on the trade front, are likely to dominate the market narrative on Wednesday. Finally, tomorrow is an eventful day for IBKR Forecast Contracts, with retail sales, industrial production and the Bank of Canada’s rate decision being released.

International Roundup

UK Experiences Sharp Job Losses

The UK experienced its sharpest job losses since the pandemic last month, featuring a 78,000 decline in payrolled workers. It marks a sharp acceleration south from the decrease of 8,000 in February.

UK Sales Stronger than Headline Implies

Retail sales in the UK grew 1.1% y/y in March, thanks to favorable weather driving strong gardening equipment sales and Mother’s Day supporting demand for jewelry and beauty products, according to the British Retail Consortium and KPMG. While the result is a deceleration from the 3.5% y/y increase in March of last year, the recent metric doesn’t include Easter, which unlike 2024, occurs this month. In comparison, Easter occurred in March last year, creating a stronger comparable for the recent period. When considering this factor along with the geopolitical landscape, retail sales were stronger than the data implies at first blush. Highlights of y/y results include the following:

• Online non-food activity led with a 1.8% increase compared to a 1.4% drop one year ago
• Total non-food sales climbed 0.6%, better than the 0.4% rate in March 2024.
• In-store non-food transactions fell 0.1%. Sales for the category rose 0.1% in March 2024.  
• Food transactions increased 1.6% compared to 8.3% in the year-ago period

Industrial Production in Europe Turns Positive

Euro area industrial production climbed 1.1% m/m and 1.2% y/y in February, outpacing estimates of 0.3% and a 0.8% decline. In January, the m/m metric advanced 0.6% and the y/y result fell 0.5%. Non-durable consumer goods outpaced other categories with a 2.8% m/m increase followed by a 0.8% gain for capital goods. The intermediate goods classification and the durable consumer goods group both increased 0.3%.

Canada Inflation Moderates

Retail shoppers caught a break last month as illustrated by the Consumer Price Index climbing only 0.3% m/m and 2.3% y/y. The results were lower than the analyst forecasts of 0.7% and 2.6% and kinder to customers’ wallets than February, when the gauge climbed 1.1% m/m and 2.6% y/y. Core inflation was also benign, climbing 0.1% m/m and 2.2% y/y compared to 0.7% and 2.7% in the preceding month. 

Australian Policymakers Brace for Tariffs

The Royal Bank of Australia (RBA) anticipates using its May 19-20 meeting to assess its monetary policy in light of fresh data on inflation, household spending, the labor market and global trade turmoil, according to minutes from the organization’s March 31 to April 1 meeting. During the last meeting, policymakers concluded that it was appropriate to leave the key interest rate at 4.1% after having initiated the bank’s first rate cut in February. On a positive note, RBA Governor Michele Bullock maintained that the country’s financial system is sound and positioned to tolerate foreign shocks.