Weekly Market Outlook (24-28 March)

UPCOMING
EVENTS:

• Monday: Australia/Japan/EU/UK/US Flash PMIs.
• Tuesday: German IFO, US Consumer Confidence.
• Wednesday: Australia Monthly CPI, UK CPI, US Durable Goods
  Orders, BoC Minutes.
• Thursday: US Final Q4 GDP, US Jobless Claims.
• Friday: Tokyo CPI, BoJ Summary of Opinions, UK Retail
  Sales, French CPI, Canada GDP, US PCE, University of Michigan Consumer
  Sentiment (Final).

Monday

Monday is the Flash
PMIs Day for the Eurozone, the UK and the US. These are generally market moving
releases and they might influence the markets expectations for interest rates.
US PMIs will get special attention as they triggered the growth scare last
month.

• Eurozone Manufacturing PMI: 48.2 expected vs. 47.6
  prior.
• Eurozone Services PMI: 51.0 expected vs. 50.6
  prior.
• UK Manufacturing PMI: 46.4 expected vs. 46.9
  prior.
• UK Services PMI: 50.9 expected vs. 51.0 prior.
• US Manufacturing PMI: 51.8 expected vs. 52.7
  prior.
• US Services PMI: 50.8 expected vs. 51.0 prior.

Tuesday

The US Consumer
Confidence is expected at 94.0 vs. 98.3 prior. The last report showed Consumer Confidence posting the largest
decline since August 2021.

Stephanie
Guichard, Senior Economist, Global Indicators at The Conference Board said:
“This is the third consecutive month on month decline, bringing the Index to
the bottom of the range that has prevailed since 2022. Of the five
components of the Index, only consumers’ assessment of present business
conditions improved, albeit slightly.”

“Views of current
labour market conditions weakened. Consumers became pessimistic about future
business conditions and less optimistic about future income. Pessimism about
future employment prospects worsened and reached a ten-month high”.

Guichard added:
“Average 12-month inflation expectations surged from 5.2% to 6% in February.
This increase likely reflected a mix of factors, including sticky inflation but
also the recent jump in prices of key household staples like eggs and the
expected impact of tariffs.”

Wednesday

The Australian
Monthly CPI Y/Y is expected at 2.5% vs. 2.5% prior. As a reminder, the RBA cut
interest rates by 25 bps as expected at the last meeting bringing the Cash Rate
to 4.10% but it was accompanied by a more hawkish than expected guidance. We
got a weak Australian Employment report last week which weighed on the AUD although it
didn’t change the market’s pricing much as the focus remains on more inflation
progress.

The UK CPI Y/Y is
expected at 2.9% vs. 3.0% prior, while the M/M reading is seen at 0.5% vs. -0.1%
prior. The Core CPI Y/Y is expected at 3.6% vs. 3.7% prior, while Services
CPI Y/Y is seen at 4.9% vs. 5.0% prior.

As a reminder, the
BoE held interest rates steady at the recent policy decision with a 8-1 vote split
and the overall message was that the central bank is more focused on inflation
progress given the high wage growth and sticky inflation. The market is now
seeing 44 bps of easing by year-end compared to 53 bps before the BoE decision.

Thursday

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 continue to hover around cycle highs.

This week Initial
Claims are expected at 225K vs. 223K prior, while Continuing Claims are seen at
1896K vs. 1892K prior.

Friday

The Tokyo Core CPI
Y/Y is expected at 2.2% vs. 2.2% prior. As a reminder, the BoJ held interest
rates steady last week and didn’t offer anything new in terms of forward
guidance. The BoJ’s statement acknowledged heightened uncertainty surrounding
Japan’s economy though, adding a new reference to the “evolving situation
regarding trade.” This suggests that policymakers are closely monitoring
Trump’s tariff policies, with global trade developments remaining a key risk
factor for Japan’s outlook.

The US PCE Y/Y is
expected at 2.5% vs. 2.5% prior, while the M/M measure is seen at 0.3% vs. 0.3%
prior. The Core PCE Y/Y is expected at 2.7% vs. 2.6% prior, while the M/M
figure is seen at 0.3% vs. 0.3% prior.

Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Therefore, unless we see a deviation from the expected
numbers, it shouldn’t affect the current market’s pricing.