Weekly Market Outlook (April 22-26)

EVENTS TO COME:

• Monday: PBoC LPR, Canada PPI.
• Tuesday: Flash PMI Australia/Japan/euro zone/United Kingdom/United States.
• Wednesday: CPI Australia, retail sales in Canada, durable goods orders in the United States.
• THURSDAY: Progress of American GDP in the first quarter, unemployment claims in the United States.
• Friday: Tokyo CPI, Australian CPI, BoJ policy decision, American PCE.

Monday

The PBoC is expected to keep LPR rates unchanged at 3.45% for the 1-year and 3.95% for the 5-year. Recent data has been weaker than expected, with disappointing ‘activity’ data and the latest CPI figures coming in well below expectations as the deflationary threat remains present. PBoC Governor Pan said he still has sufficient room for monetary policy.adjustments to key rates cannot therefore be excluded.

Tuesday

Tuesday will be Flash PMI day for many major economies, but the market will focus on US markets given recent change in the Fed’s position:

• Eurozone manufacturing PMI 46.5 versus 46.1 previously.
• Eurozone Services PMI 51.8 versus 51.5 previously.
• UK manufacturing PMI 50.2 versus 50.3 previously.
• UK Services PMI 53.0 vs. 53.1 previously.

There is no consensus on the US figures at the time of writing, although the previous publication showed a manufacturing PMI falling to 51.9 from 52.2 previously and a services PMI falling to 51, 7 against 52.3 previously.

• US manufacturing PMI 50.2 versus 50.7 previously.
• US Services PMI 52.0 vs. 52.5 previously.

Wednesday

Australia’s first quarter year-on-year CPI is expected at 3.4% versus 4.1% previously, while the Q/T measure is forecast at 0.8% versus 0.6% previously. We will also get the monthly CPI data with an annual figure of 3.4% compared to 3.4% previously. As always, the market will mainly focus on the core inflation numbers (trimmed average and weighted average) as this is what the RBA is most concerned about.. The market has predicted all rate cuts in 2024 and is now looking at 2025 for the first.

THURSDAY

U.S. jobless claims continue to be one of the most important releases to follow each week because it is a more current indicator of the state of the job market. Indeed, disinflation reaching the Fed’s target is more likely with a weakened labor market. A resilient labor market, however, could make achieving this goal more difficult.
Initial claims continue to hover around cycle lows, while continuing claims remain firm around the 1,800,000 level. This week, initial claims are expected at 210,000 compared to 212,000 previously, while it was not There is no consensus at the time of writing for continuing claims, although the previous publication showed a slight increase to 1,812,000 from 1,810,000 previously.

Friday

The BOJ is expected to keep interest rates steady at 0.00-0.10% with no changes except perhaps a slight change to its projections of real GDP and core CPI. This meeting follows the one where they finally left the negative interest rate policy by raising rates for the first time since 2007. Overall it will probably be boringtherefore the Tokyo CPI will have more weight, although expectations are not high since inflation is expected to fall further.

Tokyo’s YoY CPI is expected at 2.6% from 2.6% previously, while Core YoY CPI is expected at 2.2% from 2.4% previously and Tokyo’s YoY CPI is expected at 2.2% from 2.4% previously and basis year-on-year to 2.7% versus 2.9%. Before. The Tokyo CPI is considered a leading indicator of national CPI trends because Tokyo is Japan’s largest city and a major economic hub. The BoJ recently hinted at the possibility of another rate hike, regardless of its inflation forecasts. However, this will require sustained wage growth and a rebound in consumption..

US PCE Y/Y is expected at 2.6% versus 2.5% previously, while the M/M metric is estimated at 0.3% versus 0.3% previously. The Core PCE Y/Y, which is the Fed’s preferred inflation measure, is expected at 2.7% from 2.8%, while the M/M figure is expected at 0.27% from 0, 26% previously. Forecasters can reliably estimate PCE once the CPI and PPI are released, so the market already knows what to expect.

Additionally, Fed Chairman Powell has already suggested that his estimates show Core PCE changed little in March and Despite this, the Fed’s Williams (neutral) proposed rate hikes if inflation growth stalled, and the Fed’s Goolsbee (dove) took a more neutral stance..

The market will need a downside surprise to price the rate cuts higher. However, given the Fed’s recent change in stance, the market reaction function is now expected to change, i.e. hotter data may begin to indicate that the market is pricing in slight chances of a hike rates.