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Investment Bank

Investment Bank

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After midnight, we're gonna let it all shut down

Aziz Sunderji, Zoso Davies

  • The US Congress needs to pass a spending bill by midnight in order to keep the government from shutting down. We think they will pass a short-term bill to provide additional time, and then later agree to a longer term continuing resolution to keep the government operational through to the fall.

  • Strong corporate earnings may be helping sustain investor optimism amid this policy uncertainty. More than a quarter of S&P 500 companies have reported quarterly results since 3 April. Of those companies, roughly three quarters have beat EPS expectations. The overall beat-to-miss ratio for earnings has been strongest in consumer discretionary and real estate, while energy, materials and tech have performed the best against top-line estimates.

  • Today’s advance (first) reading of US Q1 GDP should show the US economy growing at only 1%, but we think this slowdown is likely to prove transitory. We recently revised our Q1 forecast from 2% to 1%. This is in line with our GDP tracking estimate. Growth was slowed by statistical and real factors; both should pass. We expect the economy to return to modest rates of growth in the future.

  • The ECB is moving very slowly towards removing accommodation. At the meeting yesterday the Governing Council did not make any monetary policy changes or alter its forward guidance. It did, however, indicate that risks to the growth outlook, though still tilted to the downside, were gradually “moving towards a more balanced configuration”.

  • We think the ECB is inching towards more symmetric forward guidance at the June meeting, which will open the door to hiking the deposit rate slightly, and slowing the pace of QE, in 2018. The euro area will likely experience only a gradual improvement in inflation dynamics in 2017-18.
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Barclays Live app for iPad and Android tablets

The Barclays Live app for tablets helps institutional clients to cut through the information deluge. Interactive tiles allow clients to view the content they want, store it for offline use, annotate it on the go, and more. It's Barclays Live, now tailored for you on iPad and Android tablets.

More about Barclays Live app
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