- MON: Easter Monday – US markets open, Japan Trade Balance (February), EZ Sentix Index (April).
- Tuesday: IMF World Economic Outlook, EIA Short Term Energy Outlook, Chinese Inflation (March), Norwegian Consumer Price Index (March), EZ Retail Sales (March).
- married: FOMC Meeting Minutes, BoC Announcement, US CPI (March).
- Thursday: OPEC Oil Market Report, Australian Jobs Report (March), China Trade Balance (March), UK GDP Corporation. (February), US PPI (March).
- Republic of Macedonia: EIA Oil Market Report, Swedish Consumer Price Index (March), US Retail Sales (March), University of Michigan USA. (April).
Note: Previews are listed in daily order
Chinese inflation (Tuesday): China CPI is expected to rise again in March, with CPI expected to rise yoy to 1.9% from 1.0%, while M/M is expected at 0.2% (previously -0.5%) and CPI is expected at 0.2% (previously -0.5%). Producers is seen at -1.3% (previously -1.4%). Using China’s Caixin PMI as a proxy, the services release suggested that “the latest survey data indicated that cost pressures had spread at the end of the first quarter, with average input prices rising at a robust pace that was the fastest since August 2022. Increases in staffing costs and material prices were cited.” However, efforts to remain competitive have limited the ability of firms to pass on higher cost burdens to customers, as evidenced by the marginal rise in prices charged by service providers.” After last month’s release, analysts cited by SCMP suggest “China’s consumer inflation is expected to pick up over the coming months, in line with the country’s economic recovery after emerging from zero.”
BoC Policy Announcement (Tuesday): The Bank of Korea is expected to maintain interest rates at 3.50%, and its decision is likely to be supported by lower inflation, as well as growth concerns after global banking problems, which led to some domestic concerns about capital outflows, although some of them eased concerns. at recent days. However, some recent activity data indicated resilience in economic conditions. “While the policy statement is likely to confirm that the BoK will maintain its hawkish stance, keeping the interest rate on hold for the second consecutive meeting would support our baseline scenario that the rate hike cycle actually ended in January,” wrote Societe Generale. He adds, “We expect Yoon-Je Cho to vote to raise 25 basis points again and that board members’ opinions on final interest rates will be equally divided, with three on 3.75% and three on 3.50%.”
FOMC Meeting Minutes (Wednesday)At its March meeting, the Federal Open Market Committee raised its rates by 25 basis points, in line with market expectations. Its updated economic forecast left the final bid unchanged at 5.1%, and its statement removed the reference to the committee expecting that “continued increases in the target rate would be appropriate,” although it added that “some firm additional policies may be appropriate.” Its average view of where rates will be in 2024 rose to 4.3% from 4.1%. The inflation profile is up for the year, although it’s unchanged in 2024 and 2025, while the core inflation view is up slightly for this year and next. The Fed expressed confidence in the banking system, noting that it is “sound” and “resilient,” adding that recent developments are likely to lead to a tightening of credit conditions and will affect economic activity, employment and inflation. Some speculated that the Fed may slow the pace of balance sheet cuts, though the statement said it would continue to cut Treasury and MBS holdings in line with its previous announcements. Since then, Fed policymakers have seemed very focused on managing high inflation, with many pointing to the need for more progress to return price growth to its target. In the post-meeting Q&A, Chairman Powell said that no participant cut rates in this year’s baseline scenario; Traders have recently bet that the Fed will need to steer its policy towards more accommodative conditions as some of the major economic data are starting to show a slowing growth dynamic. Powell said he still sees a path to a soft landing, and the Fed has been trying to find it. Elsewhere, Powell stressed that the Fed’s policy-making depends on incoming data, meeting-by-meeting, and will depend on the actual and expected effects of credit tightening. Powell said that if the Fed needs to raise interest rates, it will, but for now, officials see the potential for tightening credit, and the impact of that could be seen as another increase.
BoC Policy Announcement (Wednesday): Analysts expect the BoC to keep interest rates at 4.50% after signaling a conditional halt at the March meeting. Recent inflation data showed the core CPI fell more than expected, due to lower energy inflation, while the Bank of Canada’s core measures also showed improvement. RBC analysts said that while inflation remains a concern, the positive trend is likely to keep the BoC on the sidelines. Later this year, money markets are pointing to some potential for a rate cut, and traders will be looking for any commentary that confirms the validity of this pricing, especially as officials still want to see progress on the inflation front, and against statements by policymakers that they are still ready for it. . Resume raising interest rates if it appears that inflation will not return to 2% in 2024. The April meeting will be accompanied by new economic forecasts.
US CPI (Wednesday): At the time of writing, the aggregate view expects core inflation to remain unchanged at 6.0% yoy in March, while the core gauge is also seen to be little changed around 5.5% yoy. During this release, merchants will look to service sector components, which officials still consider to be a nuisance. Fed policymakers recently looked at the problems plaguing the banking sector, and reaffirmed their commitment to getting inflation under control, with many noting that there is still more work to be done given inflation remains well above target, although of progress in this dimension. In addition, some have highlighted that recent moves by OPEC to tighten crude oil markets add to uncertainty in lowering price pressures in the coming months. While the data will help us shape expectations about what the Fed will do at the FOMC meeting on May 3, analysts note that there are still other data points that will influence central bank thinking before then.
Australian Jobs Report (Thursday): Bureaus expect Australia added 20K jobs in March (previously +64.6K), while the unemployment rate rose to 3.6% from 3.5%. Analysts at Westpac point to declines and gains in employment over the past three months as seasonal factors, but “given recent volatility, an underlying downward trend is beginning to emerge,” the bureau says, adding that employment growth has shown a clear slowdown. However, analysts noted upside risks to their employment outlook at +25k, above market expectations, citing recent payroll data. Analysts also note that the unemployment rate for February fell from 3.7% to 3.5%, as the rise in participation led to labor force growth of 48.1k, less than the increase in employment.
Chinese Trade Balance (Thursday)There is currently no forecast for the trade balance for the month of March, which settled at a surplus of $116.88 billion in the previous release, while exports and imports were -6.8% and -10.2%, respectively. Following the previous month’s release, the chief economist of Hang Seng China Bank suggested, “It is very likely that China will run a trade deficit in 2023, which will lead to lower GDP growth and lower profits and employment in the manufacturing sector.” The bureaus indicate that the surplus will narrow to 1.4% of GDP from 2.3% in 2022 amid concerns about global growth.
UK GDP (Thursday): UK GDP is expected to expand 0.1% m/m in February vs. 0.3% in January. The previous report saw January GDP rise to +0.3% versus a -0.5% contraction in December, with the most favorable performance in the month data attributed to growth in education, transport and storage, human health and arts and leisure activities – all rebounding after declines in December 2022. This time around, Pantheon macroeconomics expects the upcoming release to show that “economic activity has continued to broadly plateau,” adding that its forecast of “zero growth per month would leave gross domestic product on course to decline marginally on a quarterly basis in the quarter.” the first “. After February, Pantheon notes that “the sustained rise likely won’t continue until the third quarter, when prices begin to rise more slowly than wages.” From a policy perspective, pricing on the May 11 meeting has an unchanged rate implied at 37%, while a rate hike of 25 basis points implied a probability of 63%. The weak report could see some traders asking for their forecast for the next month’s move; With that said, the consensus at the meeting is likely to be more dependent on upcoming CPI and labor market data.
US Retail Sales (Friday): At the time of writing, core retail sales are expected to decline 0.3% m/m in March, core retail sales are expected to decline 0.1% m/m, while Control Group is expected to decline 0.3%. The data will be framed in the context of slowing economic growth dynamics, which are increasingly becoming a focal point for traders. The Conference Board’s measure of consumer confidence in March improved slightly on the headline level, but measures of current situation eased. The report noted that while consumers feel a little more confident about what lies ahead, they are a little less optimistic about the current landscape. Overall appliances purchase plans continued to decline while car purchases saw a slight increase in the month. The data also included a special question this month, asking about consumer spending plans on services over the next six months; The data showed that consumers plan to spend less on the highly discretionary categories, but will spend more on the less discretionary categories.
US bank earnings (Friday): First quarter reporting season is set to begin, with major banks reporting on Friday. In addition to the usual metrics we’ll watch – top and last performance, loan provisions, economic outlook, etc. – the Street will pay particular attention to any commentary about how recent stresses in the banking system have affected operations. Goldman Sachs says it expects investors to focus on deposit flows and pricing dynamics, but also what is offset by the tougher lending standards, weaker economic backdrop and effects on provisions and discounting, as well as the long-term ramifications. of organizational reform.
This article originally appeared Newsquack.