UPCOMING
EVENTS:
- Monday: New Zealand Services PMI, NY Fed Consumer Inflation
Expectations. - Tuesday: RBA Meeting Minutes, UK Employment Report, German
ZEW, Canada CPI. - Wednesday: Japan Tankan, China Industrial Production and
Retail Sales, UK CPI, US Retail Sales, US Industrial Production and
Capacity Utilisation, BoC Policy Announcement, US NAHB Housing Market
Index, Fed Chair Powell. - Thursday: New Zealand Q1 CPI, Australia Employment
report, ECB Policy Announcement, US Housing Starts and Building Permits,
US Jobless Claims. - Friday: Japan CPI (Good Friday Holiday)
Tuesday
The UK
Unemployment Rate is expected to remain unchanged at 4.4%. The Average Earnings
are expected at 5.7% vs. 5.8% prior, while the Ex-Bonus Earnings are seen at 6.0%
vs. 5.9% prior. The data is unlikely to influence market expectations as the
focus remains on the tariff negotiations and the US-China developments. The
market is currently pricing 76 bps of easing by year-end with an 85%
probability of a 25 bps cut at the upcoming meeting.
UK Unemployment Rate
The Canadian CPI
Y/Y is expected at 2.6% vs. 2.6% prior, while the M/M reading is seen at 0.6%
vs. 1.1% prior. The Trimmed-Mean CPI Y/Y is expected at 3.0% vs. 2.9% prior,
while the Median CPI Y/Y is seen at 3.0% vs. 2.9% prior.
Inflation has been
moving higher recently after the aggressive BoC easing and the tariffs are
expected to keep inflation higher while weighing on growth. The market sees 36
bps of easing by year-end with a 61% probability that the central bank will
hold rates unchanged this week.
Canada Inflation Measures
Wednesday
The UK CPI Y/Y is
expected at 2.7% vs. 2.8% prior, while the M/M reading is seen at 0.4% vs. 0.4%
prior. The Core CPI Y/Y is expected at 3.5% vs. 3.5% prior, while Services CPI
Y/Y is seen at 4.9% vs. 5.0% prior.
Again, the data this
month is unlikely to influence market’s expectations that much as the focus
remains on tariff negotiations. The market is currently pricing 76 bps of
easing by year-end with an 85% probability of a 25 bps cut at the upcoming
meeting.
UK Core CPI YoY
The US Retail
Sales M/M is expected at 1.4% vs. 0.2% prior, while the ex-Autos figure is seen
at 0.4% vs. 0.3% prior. The focus will be on the Control Group figure which is
expected at 0.6% vs. 1.0% prior.
Consumer spending
has been stable in the past months which is something you would expect given
the positive real wage growth and resilient labour market. More recently
though, we’ve been seeing some marked easing in consumer sentiment due to the
ongoing trade wars which could weigh on spending going forward.
US Retail Sales YoY
The BoC is
expected to keep rates unchanged at 2.75%. As a reminder, the BoC cut interest
rates by 25 basis points to 2.75% as expected at the last meeting amid concerns
over weaker growth ahead due to the trade uncertainty and US tariffs. The
central bank emphasized a cautious approach to future decisions, balancing the
upward pressure on inflation against the downward pressure on weaker demand. The
market expects just one last cut by year-end.
Bank of Canada
Thursday
The New Zealand Q1
CPI Y/Y is expected at 2.3% vs. 2.2% prior, while the Q/Q figures is seen at
0.7 vs. 0.5% prior. The market sees 103 bps of easing by year-end with a 72%
probability of a 50 bps cut at the upcoming meeting. All these market
expectations about interest rates were influenced by the global market rout
following Trump’s aggressive tariffs. That’s where the focus is now. A reversal
or easing in the trade war would diminish the aggressive rate cuts
expectations.
New Zealand Q1 CPI YoY
The Australian
Employment report is expected to show 35K jobs added in March vs. -52.8K in February,
and the Unemployment Rate to tick higher to 4.2% vs. 4.1% prior. The US trade
war and the global market selloff pushed the market to expect 107 bps of easing
by year-end with a 40% probability of a 50 bps cut at the upcoming meeting.
Australia Unemployment Rate
The ECB is
expected to cut by 25 bps bringing the deposit rate to 2.25%. The market then
expects at least two more rate cuts by year-end. Interest rates expectations
have been shaped by the ongoing trade war and the recent 90-days pause for
reciprocal tariffs helped to alleviate the aggressive pricing. Again, it’s all
about the trade war now as the data remains old news.
European Central Bank
The US Jobless
Claims continue to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.
Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims hover
around cycle highs.
This week Initial
Claims are expected at 226K vs. 223K prior, while there’s no consensus for
Continuing Claims at the time of writing although the prior release saw a
decrease to 1850K vs. 1893K prior.
US Jobless Claims
Friday
The Japanese Core
CPI is expected at 3.2% vs. 3.0% prior. Given the global market rout and
aggressive risk off sentiment, traders scaled back their rate hikes
expectations and they now see the BoJ remaining on hold for the rest of the
year. Of course, this is all connected to the trade war so an easing and positive
developments on that front should increase the expectations for a rate hike by
year-end.
Japan Core CPI YoY
