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.