Week Ahead – Can CPI, Retail Sales, and Bank Earnings derail Fed rate hike odds?

US

The US labor market is softening, but still remains tight and that should keep the door open for policymakers to raise rates again at the May 3rd policy meeting. The focus now shifts to whether disinflation trends can get back on track.  The March inflation report is expected to show a slower monthly pace of 0.2%, down from 0.4%, while headline inflation reading is expected at 5.2% year on year, down from February’s 6.0%.  The March Retail Sales report is also expected to show another soft month of spending.  

The Fed minutes will be dissected and so will a handful of Fed speakers comments that might contain clues that policymakers are nearing the end of this tightening cycle.  Fed’s Williams speaks on Monday, Fed’s Goolsbee, Harker, and Kashkari talk on Tuesday.  Wednesday contains an appearance by Fed’s Barkin.  

Earnings season is here and Wall Street will pay close attention to what the big banks have to say.  JPMorgan, Wells Fargo, and Citigroup will not only give their assessment on their own balance sheets and the health of the US consumer, but also whether they saw significant flows stemming from the turmoil triggered by SVB and others.  

Eurozone

Next week isn’t just shortened following the Easter weekend, it’s also light on hard-hitting economic data. The ECB accounts will be of interest considering recent events and the central bank’s decision to hike by 50 basis point amid the banking turmoil. But with information at the time a little light, we may not be able to gauge too much from the minutes over the longer-term. 

UK 

The long bank holiday weekend means it’s going to be a slow start to the week with Wednesday bringing the first event of note, a speech from BoE Governor Andrew Bailey in Washington. From there, GDP on Thursday is accompanied by a bunch of tier three indicators, as well as an appearance from BoE Chief Economist Huw Pill, with Silvana Tenreyro also appearing on Friday.

Russia

Very little of note next week apart from CPI inflation data on Wednesday, which is expected to mark a very substantial annual drop coming a year on from the invasion and sanctions.

South Africa

A very quiet week with no major economic releases or events. The following weeks will be spent judging whether the SARB had legitimate cause for concern when hiking by 50 basis points in March.

Turkey

A selection of interesting economic releases due next week, most notably the current account which is deeply in deficit despite apparent attempts to correct it. Just another example of the monetary policy experiment failing to deliver on what it promised. That aside we’ll get labour market figures on Monday. 

Switzerland

Another very quiet week which starts with a bank holiday on Monday and contains only PPI data on Friday.

China

It will be a busy week filled with money supply, credit inflation, trade data and home prices in China. Expectations are for the banks to have provided more support to the economy and that aggregate financing picked up in March. Inflation is expected to remain steady at 1.0% and deflationary pressures will weigh on PPI, paving the way for the PBOC to cut rates.  Trade data is expected to show continued weakness with both imports and exports.       

India

After the RBI refrained from raising rates, inflation is now expected to fall back into the RBI’s target range. The March inflation report is expected to drop from 6.44% to 5.76%, back in the 2-6% RBI target range. March trade data is also expected.      

Australia

Australia will have multiple economic releases, with the main one being the March employment report.  The employment change is expected to slow from a 64.6K pace to 20.0K, as the unemployment rate ticks higher to 3.6%.  Earlier in the week, Westpac consumer confidence and NAB business confidence will be released.  

New Zealand

New Zealand has a relatively quiet week with the exception of the release of card spending data, manufacturing PMI, and Net migration. 

Japan

Several releases will occur with Japan, but nothing really stands out.  Some attention will fall on PPI as that recently was stuck near 41-year highs but has started to come down.  Core machine orders will also be watched as those readings are expected to soften.  

Singapore

The April policy decision by the Monetary Authority of Singapore could see further tightening as pricing pressures remain persistent. This would be the sixth straight time in a row that they will tighten policy, but possibly the last time in this cycle. The advance release of Q1 GDP is due: q/q 0.2% expected v 0.1% prior; Y/Y: 0.7% expected v 2.1% prior. Growth should have been supported by household spending and improving exports.       

Markets

Energy

The surprise OPEC+ output cut continues to dominate price action in oil markets. The reduction was substantial but pre-emptive which has left traders questioning whether this was just a price issue or a belief that the global economy is heading for a difficult period. Crude prices have held onto the initial gains and have been in consolidation since having failed to break beyond the highs of the range they traded in from early December to mid-March. 

There have been some bullish calls on oil prices but it’s worth remembering that there’s a reason oil prices were struggling to fully recover the losses in the aftermath of the banking turmoil. Tighter credit conditions mean a slower economy, even recession, and lower demand. The extent of that at this point isn’t clear though and only when it is can we properly judge what the price impact of the cuts is.

Gold

The outlook for gold is closely tied to that of US yields which have fallen considerably in the aftermath of the banking turmoil and are falling once more as recession fears resurface. That’s helped propel gold above $2,000, a level above which it has only ever spent a handful of days. The yellow metal may have record-high ambitions having overcome that psychological resistance but that may depend on yields slipping further. 

Whether that comes from recession fears, lower inflation, increasing labour market slack, or a combination of these, investors are becoming increasingly confident that the Fed is done and will be forced to reverse course a few times later in the year.

Crypto

Bitcoin has been consolidating for a few weeks now after surging amid the banking mini-crisis. That it’s managed to hold those gains for this long is encouraging, even if the trigger for the initial rally isn’t particularly clear. Still, it continues to trade not far from $30,000 and a break above here would be a big psychological boost. Ethereum has been gaining traction ahead of a major upgrade that is expected to let holders more easily access their tokens.  


Sunday, April 9

Economic Data/Events:

  • China money supply, new yuan loans to be released this week
  • Easter Sunday.

Monday, April 10

Economic Data/Events:

  • US wholesale inventories
  • China aggregate financing
  • Top global finance officials and central bankers speak at IMF/World Bank spring meetings in Washington
  • New Zealand home sales
  • Singapore GDP
  • Turkey current account
  • ECB governing council member Pablo Hernandez de Cos speaks at Brookings Institute event in Washington.
  • Fed’s Williams takes part in a moderated discussion hosted by the Economics Review at New York University.
  • Financial markets closed in Canada, Australia and most of Europe for Easter Monday.

Tuesday, April 11

Economic Data/Events:

  • US President Biden begins visit to Northern Ireland and Ireland.
  • Australia consumer confidence
  • China PPI, CPI
  • Eurozone retail sales
  • Mexico international reserves, industrial production
  • South Africa manufacturing production
  • Taiwan trade, CPI
  • Turkey industrial production
  • Swiss parliament to discuss the Credit Suisse/UBS deal and changes in regulation in two-day special session.
  • IMF world economic outlook, global financial stability reports released during spring meeting
  • USDA’s World Agricultural Supply/Demand Estimates (WASDE) released.
  • Fed’s Goolsbee speaks at the Economic Club of Chicago forum luncheon.
  • Fed’s Kashkari will take part in a moderated town hall hosted by Montana State University in Bozeman.
  • Fed’s Harker discusses the economic outlook at an event hosted by the Wharton Business School.

Wednesday, April 12

Economic Data/Events:

  • US FOMC minutes, CPI
  • Canada rate decision
  • India industrial production, CPI
  • Japan machinery orders, PPI
  • Russia CPI
  • G-20 finance ministers and central bank governors meeting in Washington
  • ECB’s Villeroy speaks at Peterson Institute meeting in Washington.
  • Canada Fin Min Freeland speaks
  • RBA’s Bullock speaks on WEAI monetary panel at University of Melbourne.
  • ECB’s De Cos and BOE Gov Bailey speak at Institute of International Finance event in Washington.
  • ECB’s de Guindos attends an event organized by Asociacion para el Progreso de Dirección in Madrid.
  • Fed’s Barkin speaks at an annual conference on investing in the rural economy hosted by his bank.

Thursday, April 13

Economic Data/Events:

  • US PPI, initial jobless claims
  • Australia unemployment
  • China trade
  • Eurozone industrial production
  • Germany CPI
  • Italy industrial production
  • Japan M2 money stock
  • UK industrial production
  • BOC Gov Macklem speaks on economic growth and inflation
  • ECB’s Nagel speaks on global economy
  • Italy Istat releases monthly economic note.
  • BOE chief economist Pill speaks about the UK economy and monetary policy at MNI conference.

Friday, April 14

Economic Data/Events:

  • US retail sales, business inventories, industrial production, University of Michigan consumer sentiment
  • Bank Earnings from JPMorgan, Wells Fargo and Citigroup
  • Canada existing home sales
  • France CPI
  • India trade
  • New Zealand PMI
  • Poland CPI
  • Spain CPI
  • BOE’s Tenreyro speaks on inflation panel at IMF/World Bank meetings
  • ECB’s Nagel speaks on “getting inflation under control” at Peterson Institute meeting.
  • BOJ’s Shimizu speaks about Japan’s economy and labor market.
  • France’s Constitutional Council will review President Macron’s controversial pension reform.
  • Some Eastern European financial markets are closed for Orthodox Good Friday

Sovereign Rating Updates:

– Portugal (Fitch)

– Czech Republic (S&P)

– Romania (S&P)

– European Union (Moody’s)

– Israel (Moody’s)

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.