Some concern about the growth  emerged over the week with the print of European and Japanese manufacturing and services data highlighting weakness in the month of March. The Eurozone Market Composite Index fell 3.2 per cent and the Manufacturing print for Japan likewise fell 1.7 per cent from the respective February levels of 55.3 and 54.1. Counter to these concerns was the upwards revision of US GDP figures for the Dec-17 quarter which saw the American economy grow by 2.9 per cent year-on-year (consensus: 2.7 per cent). The main driver was the largest gain in consumer spending in three years helping offset the drag from a surge in imports. This takes the slowdown from the high Sep-17 quarter reading of 3.2 per cent only slightly lower as opposed to the initial annual growth reading of 2.5 per cent that was initially recorded. In addition, the US PMI rose 0.7 per cent from its February level of 55.3. On balance these results highlight ongoing US economic strength and some potential signs of weakness in both the Eurozone and Japanese economies. We should note that readings above 50 in these indices still indicate expansion but the decline highlights that it has not continued to accelerate but rather has slowed somewhat while still growing. Global share markets saw a mixed performance last week driven by a few factors. Facebook’s ongoing privacy scandal where it is facing allegations of a cavalier approach to user data weighed on the tech sector this week. This was followed on by speculation on further US sanctions against China over intellectual property rights violations and fears of a Chinese response which weighed on markets further. On balance, the S&P500 eked out a positive return for the week with European equities also up for the week. Australian shares by contrast ended the week lower with poor performance in bank and materials shares helping drag the index lower. Japanese and European equities benefited from the depreciation of their respective currencies against the US Dollar. Oil fell last week on news of expanding US crude stockpiles weighing on the Brent benchmark with a three-day losing streak, the longest in almost a month. A yuan-denominated oil futures contract also began trading to some fanfare. Time will tell if it takes a more central role in global markets given China’s challenges in liberalising its financial markets to date such as stronger capital controls than other trade centres. Investors flying to safety saw demand rally for US Treasuries driving yields lower for the week with the 10-year yield declining by over 1 per cent from 2.81 to 2.78% while the 3-year yield was flat for the week. A similar effect was seen for Australian government bonds with sizeable falls in the 3-year yield and 10-year yield of over 2 per cent each from 2.08% to 2.04% 2.65% to 2.58 respectively. The other item of note has been emerging concern over a widening of the spread between the LIBOR rate and the overnight indexed swap (OIS) rate which is considered as a measure of the health of the banking system. We can see this in the uptick of the 90-day bank bill rate which follows the LIBOR rate which if it persists could see Australian bank funding costs rise as the trade to borrow cheaply overseas and lend at a profit in Australia unwinds. The underlying cause remains undefined with changes to the US tax system being identified as encouraging the liquidation of foreign bank debt which in turn pushed up bank funding costs as foreign banks sought alternatives in the Libor market.

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