Geopolitical concerns continued to play a role in financial markets last week as another North Korean failed missile launch set up the peninsula for a potential showdown. Although haven assets initially fell throughout the week on the heels of the French election results, the safety plays picked up demand through the second half. In the United States, housing data continued to show moderate improvements with new home sales climbing as prices rose by 5.90% year over year through February according to S&P Case-Shiller. However, durable goods orders failed to meet consensus estimates while the advance reading of first quarter gross domestic product coming in at a disappointing 0.70% expansion compared to forecasts of 1.20%.
Shifting gears towards Europe, the European Central Bank left interest rates unchanged during the latest decision, choosing instead to adjust the language modestly by downplaying the risks to the outlook. Helping matters was the pickup in Euro Area inflation on both a core and headline basis which is easing pressure on the ECB to accommodate policy further. The Bank of Japan kept interest rates unchanged during its own decision while optimistically revising GDP forecasts higher despite inflation projections edging lower. Finally, Australian consumer prices managed to rise back towards the RBA target band of 2.00-3.00% in a sign of improving economic momentum.