3 numbers to watch: Swiss KOF, US GDP & Italian bonds

The US GDP report, which is expected to show respectable growth, and Italian auctions are bound to dominate headlines today while the Swiss KOF Leading Indicator will serve as a nice appetizer. Why wait, let's jump right in...

• Apr. KOF Swiss Leading Indicator (07:00 GMT) to rise again? The Swiss economy has seen some improvement recently as the impacts from the weak Eurozone economy and the 2008-11 plunge in the EURCHF (it lost almost 27% in that period) subside. Indeed, the leading indicator has picked up and recorded its first positive reading in March (+0.08) after two negative months to start the year. Consensus looks for an acceleration to 0.20, which bodes well for the coming quarters, but before that we will likely see GDP growth decelerate further.

• Italian bond auctions (09:00) to see yields rise? Yesterday we saw a rather disappointing Italian 184-day bill auction with EUR 8.5 billion allotted and 14.5 tendered (bid-to-cover of 1.71) at an average yield of 1.772% vs. 1.119% at the previous auction just a month ago (28 March). Short-term financing costs are rising, but what about the long term? The largest PIIGS economy will auction off 4-, 5-, 7- and 10-year bonds with a maximum of EUR 2.5 billion in both the 5- and 10-year. The 10-year Italian government bond is currently trading around 5.625% while today's coupon is 5.5%. The equivalent auction on 29 March saw an average yield of 5.24%.
• 1Q'12 US GDP (12:30) set for reasonable growth: While the Eurozone struggles to escape the recession it currently finds itself in, the US has seen activity pick up in recent quarters to 3% q/q (annualised) in 4Q'11 and consensus sees another reasonably strong quarter with 2.5% growth. This could be even more impressive than Q4's 3% since a lot of that came from changes to inventory. Having said that, we still see growth slowing down further in this second quarter as private income has weaknened and the labour market turns a bit softer. Personal consumption is seen accelerating to 2.3% from 2.1% while the price deflators should jump to 2.1% for both (GDP deflator and Core PCE deflator) from 0.9% and 1.3%, respectively, in 4Q'11.

You can follow my reaction to these figures after publication on TradingFloor.com at http://www.tradingfloor.com/traders/mads-koefoed.