The German 10-year Bund yield rose past 2.47% on Friday following remarks from ECB board member Isabel Schnabel cautioning against further rate cuts post-June. Schnabel stated in an interview that a rate cut in June might be warranted depending on data and new Eurosystem staff projections. However, she emphasized the uncertainty beyond June, noting the challenge of achieving stable inflation. In contrast, US data released this week indicated a slowdown in inflation and economic growth in April, heightening expectations for Federal Reserve rate cuts. Market expectations for ECB rate cuts in 2024 decreased from 72 on Thursday to 68 basis points, while Fed rate cuts decreased from 50 to 46 basis points.

Major bourses in Europe were lower on Friday, with both the STOXX 50 and the STOXX 600 falling about 0.2%, extending losses from the previous day. Traders continue to asses the monetary policy outlook, with comments from Fed officials suggesting interest rates will remain elevated for some time while in Europe, ECB member Schnabel said the central bank should be cautious about rate cuts beyond June. At the same time, mixed data coming out of China also weighed on investors' mood. On the earnings front, Richemont reported a slowdown in sales but the luxury group appointed a new CEO, which sent its shares up more than 6%. Engie backed its outlook despite a fall in earnings. On the week, the STOXX 50 is down about 0.2% while the STOXX 600 added 0.6%.

Industrial production in Switzerland slumped 3.1% year-on-year in the first quarter of 2024 from an upwardly revised 0.5% fall in the preceding quarter. It marked the second consecutive quarter of declining industrial activity, as output tumbled for mining & quarrying (-1.2% vs 1.8% in Q4) and continued to fall for manufacturing (-4% vs -1.8% in Q4). Moreover, output slowed sharply for electricity supply (6.6% vs 15.8%). On a seasonally adjusted quarterly basis, industrial production dropped 1% in Q1 of 2024, slowing from an upwardly revised 1.1% fall in the previous quarter.

The unemployment rate in France stood at 7.5% in the first quarter of 2024, unchanged from the past two-quarter periods and compared to market consensus of 7.4%. The number of unemployed persons rose by 6 thousand from the prior quarter to 2.3 million, with the unemployment rate for people aged 25 to 49 falling 0.2 percentage points to 6.8%. Meanwhile, the unemployment rate for people aged 15 to 24 increased by 0.6 percentage points to 18.1% and rose by 0.1 percentage points to 5.1% for those aged 50 and more. Among genders, the jobless rate for men edged up by 0.1 percentage points to 7.7, while it ticked lower by 0.1 percentage points to 7.3% for women. The activity rate rose to 74.5% during the quarter from 74.1% in the previous three-month period.

Malaysia's economy grew 4.2% year-on-year in the first quarter of 2024, compared to initial and market estimates of 3.9% and accelerating from a downwardly revised 2.9% rise in the previous three-month period. It marked the fastest economic expansion in exactly a year, primarily attributed to positive contributions from almost all sectors, mainly led by the construction sector (11.9% vs 3.6%), followed by mining & quarrying (5.7% vs 3.5% in Q4), and services (4.7% vs 4.1%). Moreover, output rebounded for manufacturing (1.9% vs -0.3%). Conversely, output slowed for agriculture (1.6% vs 1.9%). On a seasonally adjusted quarterly basis, the country's GDP rose 1.4% in the first quarter of 2024, reversing from a downwardly revised 1% fall in the previous three-month period.

The Japanese yen weakened toward 156 per dollar, facing renewed pressure after the Bank of Japan left its bond buying amounts the same as the previous operation, opting not to follow up with a surprise cut to debt buying earlier this week. Markets speculated that the BOJ left the purchase amounts unchanged because the yen benefited from a broad weakening of the dollar, but traders are still betting that the central bank will decide to reduce bond buying at the June policy meeting. BOJ Governor Kazuo Ueda also said he has no immediate plan to sell the central bank’s ETF holdings. Meanwhile, data earlier this week showed that Japan’s economy contracted at an annualized 2% in the first quarter of 2024, coming in worse than market expectations for a 1.5% contraction as private consumption fell for the fourth straight quarter. The latest figures complicate the BOJ’s stance, which needs to balance its support for the economy with efforts to defend a weak currency.