Retail sales in the UK unexpectedly rose 1.4% mom in April of 2022, rebounding from falls in the previous two months and beating market forecasts of a 0.2% fall. Increases were seen in sales at food store (2.8%), namely alcohol and tobacco in supermarkets; non-store retailers (3.7%), namely clothing; and automotive fuel (1.4%). On the other hand, supermarket food sales were broadly unchanged and sales at non-food stores fell by 0.6% in April, mainly due to household goods stores (-0.5%) such as furniture stores. Excluding fuel, retail sales were also 1.4% higher. Considering the three months to April however, retail sales fell 0.3%, and the outlook for consumer spending remains subdued as high inflation is hurting the purchasing power.

Japan's consumer prices rose by 2.5% yoy in April 2022, the most since October 2014, after a 1.2% gain a month earlier. The latest figure also marked the 8th straight month of annual inflation, with food prices rising at the fastest pace in 7 years (4% vs 3.4% in March). Additional upward pressures also came from cost of fuel, light and water charges (15.7% vs 16.4%), clothes & footwear (0.8% vs 0.7%), culture & recreation (1.3% vs 1.3%), housing (0.4% vs 0.3%), furniture (2.3% vs 0.4%), education (0.9% vs 1.4%), and miscellaneous (1.2% vs 1%). At the same time, cost of transport fell by 0.2%, much softer than a 7% drop in March. Meanwhile, prices of medical care dropped further(-0.7% vs -0.4%). Core consumer prices went up 2.1% yoy, the 8th consecutive month of rises and the most since March 2015, matching forecasts and beating the BoJ’s 2% target for the first time in seven years. On a monthly basis, consumer prices went up 0.4% in April, the same pace as in the prior two months.

Industrial output in Switzerland expanded by 7.9 percent year-on-year in the first quarter of 2022, accelerating from a 7.3 percent gain in the previous three-month period, as output of manufacturing grew faster (10.0 percent vs 9.4 percent in Q4), while production of electricity supply shrank less (-9.3 percent vs -10.7 percent). At the meantime, production of mining & quarrying fell (-7.7 percent vs 3.1 percent). On a seasonally adjusted quarterly basis, industrial production increased 5.0 percent, following an upwardly revised 0.8 percent rise in the previous period.

European futures gained nearly 1%, tracking a general positive mood, after the PBoC cut its five-year loan prime rate by a record 15bps to support the economy. Still, investors remain concerned over global growth outlook and the recession risk arising from surging inflation and rising borrowing costs. On the data front, producer inflation in Germany broke a fresh record high for a 5th month and the consumer confidence in the UK fell to its lowest level in at least 48 years although retail sales unexpectedly jumped. Meanwhile on the corporate front, net profit and sales from Richemont were strong prompted by American demand.

Annual producer inflation in Germany jumped to 33.5% in April of 2022, breaking a fresh record high for a 5th straight month and higher than 30.9% in March and market forecasts of 31.5%. The figures reflect the effects of the war in Ukraine for the first time, with energy prices remaining the biggest upward contributor (87.3%), namely distribution of natural gas (154.8%), electricity (87.7%), mineral oil products (53.9%). Excluding energy, producer prices increased 16.3% yoy. Other significant price increases were seen for intermediate goods (26.0%), namely metals (43.3%), fertilizers and nitrogen compounds (111.7 %), wooden containers (75.0%); and non-durable consumer goods (13.2%), namely food (17.3%); and capital goods (6.7%, the biggest increase since October 1975). Compared to the previous month, producer prices increased 2.8%.

Gold held its recent advance to around $1,840 an ounce on Friday and was headed for its first weekly gain since mid-April, as continued softness in US economic data amid the Federal Reserve’s aggressive monetary tightening fueled growth concerns. The Fed has raised its benchmark policy rate by an aggregate of 75 basis points this year, and is on track to increase it again in 50-basis point increments at each of the next two meetings in June and July. Fed Chair Jerome Powell also stated that the central bank was intent on using its tools to bring down multi-decade high inflation even if it involves moving past broadly understood neutral levels, raising the risk of a recession. Fears of a US economic slowdown dragged the dollar and US Treasury yields lower, benefitting the safe-haven gold.