Below are the most important global events likely to affect FX and bond markets in the coming week starting Monday April 22.
While the latest developments out of the Middle East ratchet up uncertainty across markets, investors will continue to scrutinize economic data.
Focus is especially on the U.S. amid growing concerns that elevated inflation, a strong economy and a recent rise in oil prices could delay interest-rate cuts until later this year or even into next year. In that light, the first estimate of U.S. first-quarter gross domestic product and PCE inflation data will be particularly closely watched.
In Europe, flash purchasing managers' data for April could be a steer for whether the European Central Bank is on course to cut interest rates in June.
Japan's central bank meeting is the main event of the week in Asia and will be watched for any hint of further rate hikes to come, a possible increase in inflation forecasts, and commentary on recent sharp falls in the Japanese yen.
Indonesia delivers a rate decision after it stepped in to help prop up its beleaguered currency, while a benchmark lending rate announcement is due from the People's Bank of China. A string of inflation data will also be released, notably from Australia, Japan and Singapore.
U.S.
Prospects for U.S. interest-rate cuts any time soon are looking increasingly unlikely given evidence of a strong economy and still-elevated inflation, as well as recent comments by Federal Reserve officials. These have helped keep both U.S. 10-year Treasury yields and the U.S. dollar close to recent five-month highs.
Fed Chair Jerome Powell questioned whether the central bank would be able to lower interest rates this year. Other comments from Fed governors include Raphael Bostic saying he doesn't expect a rate cut until the end of this year, Neel Kashkari saying rates could be held steady all year, and John Williams saying there's no urgency to cut rates and that a rate hike--although looking unlikely at the moment--wouldn't be completely out of the question.
This keeps up scrutiny on U.S. economic data, particularly on the first estimate of U.S. first-quarter GDP on Thursday and PCE inflation data-the Fed's preferred measure of inflation-on Friday.
"Treasuries and global bond markets will once again look to the U.S. data calendar next week for further direction," Investec analysts said in a note, adding that they expect strong first-quarter quarter U.S. GDP growth of above 2%.
Citi analysts, however, anticipate that the PCE data could cause rate-cut speculation to resume. They noted that Powell said core PCE inflation stuck at 2.8% annually in March would be a reason to delay cuts, but Citi expects a reading of 2.7% which could fall further to 2.6% in April.
Other U.S. data include flash U.S. purchasing managers' data and March new-home sales on Tuesday; durable goods orders for March on Wednesday; and on Thursday March trade data, weekly jobless claims and pending home sales for March. The University of Michigan April final consumer survey is also released on Friday.
The U.S. Treasury will sell a total of USD183 billion in two-year, five-year and seven-year Treasurys on Tuesday, Wednesday and Thursday, respectively.
CANADA
Canada PPI for March and the March new housing price index are released on Monday, followed by retail sales data for February on Wednesday.
EUROZONE
At its recent meeting, the European Central Bank suggested a rate cut in June was likely but it would be dependent on upcoming data.
The week's focus will be on German, French and eurozone flash purchasing managers' data for April, due on Tuesday, which will give some of the first insights into economic activity at the start of the second quarter. They are expected to give further evidence of the eurozone's tentative recovery from recent weakness after March's composite PMI edged back into expansionary territory, though the region still lags well behind the U.S.
"In terms of April's survey we expect to see a continuation of recent trends to apply, with the big picture being one of easing cost-of-living pressures, a fact that should support the service sector. We also envisage the underlying picture of stabilization in manufacturing to continue," analysts at Investec said in a note.
Other data include the eurozone flash consumer confidence indicator for April on Monday; the German Ifo survey and Italy's business and consumer confidence surveys for April on Wednesday; and Germany's May GfK consumer confidence survey on Thursday. France's monthly business confidence survey for April is due on Thursday and its consumer confidence survey on Friday. Eurozone money supply data for March are released on Friday.
In the eurozone, only Germany and Italy line up for government bond auctions next week. Germany will launch new, June 2026-dated treasury notes, or Schatz on Tuesday, and reopen February 2034-dated Bunds on Wednesday. Italy will conduct a bond auction on Tuesday for 2026-dated BTP and 2029- and 2036-dated inflation-linked bonds, or BTPei.
U.K.
U.K. provisional purchasing managers' data for April on Tuesday will be closely watched amid uncertainty over when the Bank of England is likely to cut interest rates. It could opt for an early rate cut, possibly in June, if there are signs of inflation cooling and the economy weakening further. On the other hand, signs of the economy holding up could delay a move until the autumn.
Other U.K. data include the GfK consumer confidence survey for April due on Friday and public finance figures for March on Tuesday. The CBI's industrial trends survey for April is released on Monday and the distributive trades survey on Thursday.
There will be a tap of the U.K. 4.375% gilt 2054 via syndication during the week.
SCANDINAVIA
Swedish unemployment data for March are due on Wednesday. Norway unemployment, Swedish consumer confidence and Swedish PPI are released on Thursday, followed by Swedish foreign trade on Friday.
JAPAN
The Bank of Japan's policy decision on Friday will comes as the yen continues to hover near 34-year lows against the dollar and Japanese inflation trends above the central bank's 2% target.
Japan's latest data shows that domestic consumer inflation has stayed above the 2% target for two years, and economists say inflation could rise at a faster pace in the coming months if the government phases out utilities subsidies as planned at the end of May.
"If inflation continues to evolve in line with the BOJ's projections, further tightening this year may be incoming," said Capital Economics assistant economist Gabriel Ng.
Markets widely predict no policy change at the meeting, ING economists said in commentary.
The BOJ's policy board will also release its quarterly outlook on prices.
"We expect the BOJ to revise up its inflation outlook," said Min Joo Kang, ING senior economist for South Korea and Japan. "We will also see the BOJ's first forecast for FY26 [year ending March 2027], which is expected to show core inflation at 2%. These will be important factors in determining when and how much interest rates will be raised."
Movements in the yen will also be in focus.
BOJ Governor Kazuo Ueda has said it would discuss policy action if the yen's depreciation significantly affects the bank's inflation forecast. Yen weakness can boost prices of imports like energy, potentially lifting the country's inflation.
In a recent joint statement, finance ministers of Japan, South Korea and the U.S. acknowledged serious concerns over the recent sharp depreciation of the Japanese yen and the Korean won and said they would continue to consult closely on foreign exchange market developments in line with their existing G-20 commitments.
CHINA
The main event in China is the People's Bank of China's loan prime rate announcement on Monday.
Expectations are for the benchmark lending rates to remain unchanged, after the PBOC held key policy rates steady and drained liquidity from the banking sector as economic data showed fresh signs of weakness.
The hold on interest rates on the PBOC's medium-term lending facility is viewed as a precursor to lending rates as China's commercial banks are required to price their LPRs with MLF rates.
The central bank has also cautioned against large-scale monetary easing and reiterated its commitment to stabilizing the yuan, which has come under recent pressure.
UOB economists expect that while the 1- and 5-year LPRs will likely be unchanged given the yuan depreciation pressure, the PBOC will moderately increase monetary policy support this year against a low inflation backdrop, in order to boost the economic recovery amid significant downside risks.
Over the weekend, industrial profit figures will be released for March.
AUSTRALIA
The Reserve Bank of Australia's next policy meeting starts on May 6. That makes first-quarter CPI data on Wednesday the next crucial piece of the jigsaw as the market debates whether the central bank will adjust its neutral bias and investors bet on the timing of interest-rate cuts.
Inflation may have peaked in Australia but it has yet to return to the RBA's target band.
Commonwealth Bank of Australia forecasts a 0.7% rise in headline CPI in 1Q compared to the December quarter, and an annual inflation rate of 3.4%. Just like in New Zealand's latest quarterly inflation update, the devil may be in the details.
"We anticipate discretionary inflation fell further in 1Q, to near the bottom of the RBA's inflation band," said Stephen Wu, a CBA economist. "In contrast, non-discretionary inflation, while declining, is still much higher than desired."
Economists are largely divided over when the RBA will start lowering interest rates. While HSBC thinks rate cuts are unlikely in 2024, Nomura forecasts a first cut in August while CBA sees the easing cycle beginning in September.
INDONESIA
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04-19-24 1054ET
