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Wednesday: New Zealand Jobs data, Canada Manufacturing PMI, US ADP, Treasury Refunding Announcement, US ISM Manufacturing PMI, US Job Openings, FOMC Policy Decision.
The Eurozone CPI Y/Y is expected at 2.4% vs. 2.4% prior, while the Core CPI Y/Y is seen at 2.6% vs. 2.9% prior.
A sustained deterioration in the labour market though might not only make the market to confirm the rate cut in 2024 but also increase the number of cuts.
This will be the first major US labour market report of the week and, although it’s old (March data), it’s generally a market moving release.
The last report we got a slight beat with negative revisions to the prior readings highlighting a resilient although normalising labour market.
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.
This is because disinflation to the Fed’s target is more likely with a weakening labour market.
A resilient labour market though could make the achievement of the target more difficult.

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Future Events:.

Tuesday: Eurozone CPI, GDP of Canada, US ECI, US Consumer Confidence, China PMIs, China Caixin Manufacturing PMI, Japan Industrial Production and Retail Sales, Australia Retail Sales.

Wednesday: US ISM Manufacturing PMI, US Job Openings, US ADP, US Manufacturing PMI, US Treasury Refunding Announcement, and New Zealand Jobs Data.

Thursday: US Challenger Job Cuts, US Jobless Claims, Swiss Manufacturing PMI, and CPI.

Friday: US NFP, Canada Services PMI, US ISM Services PMI, Eurozone Unemployment Rate.

Tuesday.

A minor decline to 50 points3 from the Chinese Manufacturing PMI is anticipated. The Services PMI is anticipated to be 52 points2 versus 50 points8 prior. 53 points to zero earlier. It has been difficult to determine the status of the economy in China due to the recent volatility of the PMIs. They have, however, lately improved the risk perception surrounding the Chinese economy dramatically. We can anticipate a positive reaction from the market as long as they are not too bad, especially given the officials’ promised support for the policy.

The anticipated value of the Eurozone CPI Y/Y is 2.4 percent compared to. The Core CPI Y/Y is recorded at 2.6 percent vs. 2.4 percent earlier. 29.9 percent earlier. The European Central Bank (ECB) has already hinted at a rate cut in June, and it will probably take two explosive reports and dismal wage growth data for the first quarter of 2024 before they are forced to abandon the project. The market is pricing in three rate cuts this year, and although the report this week is unlikely to have a significant impact on the likelihood of the June move, it can affect pricing for the remainder of the year.

One-point 0 percent is predicted for the US Q1 Employment Cost Index (ECI) vs. 0.9 percent earlier. Although this labor cost measure is the most thorough, it is regrettably not as current as the average hourly earnings data. Nonetheless, the Fed keeps a close eye on this indicator. For the last two years, wage growth has decreased somewhat, but it is still quite high. With the Fed’s position having recently shifted, hot data is likely to cause the market to react hawkishly.

The reason for this is that strong wage growth combined with a tight labor market can keep inflation higher for longer, potentially de-anchoring expectations and making it difficult to sustainably return to target. This is true even though it might not trigger a second inflationary wave. On the other hand, positive risk sentiment with less worries about inflation and a greater emphasis on growth can result from soft data.

In April, it is anticipated that US consumer confidence will slightly decline to 104 points compared to. In March, 104 points. The Conference Board’s Chief Economists pointed out that, regardless of age or income level, confidence has been essentially flat over the past six months. Additionally, they stated that while complaints have generally decreased, consumers are still worried about high prices. As of March, assessments of the current state of affairs improved, mainly due to more optimistic opinions about the state of employment. Fears of a recession have also been declining. As a typical leading indicator of the unemployment rate, the Present Situation Index will be something to keep an eye on.

on Wednesday.

A change in employment of 0.3 percent is anticipated in the New Zealand Q1 Labour Market report compared to. the unemployment rate increased to 4 points3 percent compared to 0 points4 percent earlier. 4 percent zero earlier. The Labor Costs Q/Q is anticipated to be 0.8 percent lower than. 1 point 0 percent previous year, with the Y/Y measure slightly declining to 3 point 8 percent vs. 31.9 percent earlier. While the market sees the first move in August 2024, the RBNZ continues to project the first rate cut in 2025. Especially in light of the Fed’s recent reversal, this may just be the central bank’s tactic to prevent an early loosening of financial conditions. But if the labor market continues to deteriorate, there’s a chance that the market will confirm the rate cut in 2024 and even increase the number of cuts.

It is anticipated that the US ISM Manufacturing PMI would slightly decline to 50 points1 in comparison. 50 points three years ago. Following 16 months of contraction, the index unexpectedly entered expansion last month, accompanied by largely positive commentary. Following its expansion in Q1 2024, the SandP Global US Manufacturing PMI recently experienced another contraction. This time around, there has been some positive news on the inflation front, but overall, the commentary has been rather depressing, even mentioning significant layoff activity. The market will accept or reject the S&P Global result based on the ISM report, which is generally regarded as more significant.

Estimated US job openings are 8.680M vs. 8:756 minutes ago. This is the first significant US labor market report of the week, and even though the data is from March, it’s usually a release that moves the market. A robust but normalizing labor market was highlighted in the most recent report we received, which was somewhat beat due to negative revisions to the earlier readings. Since hiring and quit rates have recently declined from the pre-pandemic trend, the market will also be paying close attention to these numbers.

With the exception of perhaps acknowledging the recent reversal in the disinflationary impulse, the Fed is expected to maintain interest rates at 5 percent to 5 half percent. The Fed Chair Powell’s press conference and any potential updates on the QT taper will be the main topics of discussion. All things considered, it’s difficult to anticipate anything different in light of the recent hawkish remarks from the Fed, with Williams even hinting at a rate increase should inflationary pressures stall or, worse, reverse. Remarkably, the market is now fully pricing just one rate cut in 2024 compared to pricing SEVEN! at the beginning of the year.

Thursday.

It is anticipated that the Switzerland CPI M/M will be 0.1 percent vs. As of this writing, there is no consensus for the Y/Y measure, but the previous report missed forecasts once more, falling to 1 point 0 percent vs. 1 % was anticipated. A rate cut in June and for the remainder of the year has already been priced in by the market, so a significant decline could increase the size of the cuts from 25 basis points to 50 basis points.

Since the US Jobless Claims report is a timely indicator of the state of the labor market, it remains one of the most important releases to monitor each week. This is due to the fact that a contracting labor market increases the likelihood of disinflation to the Fed’s target. However, a strong labor market may make it more challenging to reach the goal. Initial Claims continue to linger near cycle lows, while Continuing Claims hold steady at 1800K. The anticipated initial claims this week are 212K vs. While there is currently no consensus regarding Continuing Claims, the previous release indicated a decrease to 1781K vs. 207K. 1796K previous and 1814K anticipated.

Friday.

It is anticipated that the US NFP report will reveal 243K new jobs in April compared to. 303K in March, while the 3 point 8 percent unemployment rate remained constant. It is anticipated that AHE would be M/M = 0.3 percent. 0 points3 percent earlier, but as of this writing, there is no consensus regarding the Y/Y figure, despite the prior release showing an easing to 4 points1 percent vs. 4:3 percent earlier. This week’s other job data will help shape the overall expectations for the report. Recently, we have seen mixed signals: there have been a lot of jobless claims, but the NFIB Hiring Intentions and S&P Global PMIs have shown declining data. The focus will also be on wage growth, since an increase will probably prompt a hawkish response, and a strong report with declining wage growth might set off some positive risk sentiment.

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