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The UK, US and the Eurozone in the week ahead

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  • First quarter US earnings from likes of Citigroup, Goldman Sachs, Morgan Stanley, and Wells Fargo
  • Key inflation data from China, US and UK
  • Holiday-shortened week as markets close for Good Friday

Monday 11th April

The holiday-shortened week kicks off with the release of Chinese inflation data. The prior reading for the Consumer Price Index (CPI) came in at an unremarkable +0.9% year-on-year which seems rather tame compared to levels seen across the US and Europe. But the Producer Prices Index is a bigger issue for the Chinese authorities as this remains elevated at +8.8% year-on-year last month, although significantly lower than the +13.5% registered last November. We’ll also see German Wholesale Prices and a raft of second division UK data which includes Construction Output, Industrial and Manufacturing Production. There’s also an OPEC meeting, although this doesn’t carry as much weight as next month’s OPEC and non-OPEC ministerial meeting which includes Russia.

Tuesday 12th April

It’s a bigger day for important data with the latest update on UK employment first thing. As with the US, the UK faces tightness in the labour market which in most circumstances is a good problem to have but can also contribute to rising inflation. The Claimant Count has fallen for 11 consecutive months and the Unemployment Rate is at an 18-month low. Average Earnings are growing at just under 5% year-on-year, which is running at quite a clip but failing to keep ahead of inflation.

Later in the morning we have the Euro Zone ZEW Survey, but most importantly the German ZEW Survey too. Both came in well below expectations last month, falling into negative territory. But perhaps that shouldn’t have been a surprise given that the surveys were conducted just after the Russian invasion of Ukraine.

Tuesday afternoon sees the latest update on US inflation in the form of CPI. Market participants are particularly concerned about inflationary pressures which are rising at their fastest pace in forty years. Last week we heard some surprisingly hawkish comments from Federal Reserve members Lael Brainard and Mary Daly, with the former calling for aggressive balance sheet reduction to begin next month. Both were previously known for taking a dovish approach to monetary policy, but their current stance was endorsed by minutes from last month’s FOMC meeting. The US central bank is expected to start reducing its balance sheet in May at a rate of $95 billion per month. FOMC members are also open to hiking rates by 50 basis points, rather than the usual 25.

Wednesday 13th April

Overnight we’ll hear the latest rate decision from the Reserve Bank of New Zealand. The central bank has raised rates at each of its last four monetary policy meetings. Later that morning we’ll get the latest inflation update from the UK in the form of both CPI and the Retail Price Index (RPI). Then we’ll find out how US producers are coping with rising input costs as the Producer Prices Indices are released. It will be interesting to see if companies are able to pass on price increases to consumers.

The Bank of Canada will announce its latest monetary policy decision. Last month it raised its key Overnight Rate to 0.50% from 0.25% – its first hike since October 2018. Will it go again?

Banking giant JP Morgan will kick off the 1st quarter 2022 earning season when it reports its numbers prior to the US open.

Thursday 14th April

Overnight sees the release of Australian Unemployment data. We also have a rate decision from the European Central Bank (ECB) followed by a press conference hosted by ECB President Christine Lagarde, which never fails to excite. President Lagarde’s press conference coincides with the latest update on US Retail Sales and Weekly Jobless Claims. Fortunately, the last day of trading before the Easter break is enlivened by a clutch of important 1st quarter earnings releases. The clutch includes Citigroup, Goldman Sachs, Morgan Stanley, and Wells Fargo who all report ahead of the US open. By this stage we should have some valuable insight in how the US financial sector has flourished, or not, given the sharp rally in bond yields and inflation expectations over the last three months. Later in the afternoon we have US Consumer Sentiment and Inflation Expectations.

Friday 15th April

Most financial markets will be closed for Good Friday. However, we have some level two economic data from the US in the form of the Empire State Manufacturing Index, Capacity Utilisation, Industrial Production and TIC Long-Term Purchases.

David Morrison is an Analyst with Trade Nation. Trade Nation was set up with the specific remit to help customers realise their trading goals by changing the way they engage with the financial markets. As well as providing full transparency and making sure all customers get a fair deal, Trade Nation is fully regulated. This means customers can be confident they’re getting the trading experience they deserve. Visit www.tradenation.com to find out more

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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