Week Ahead
US employment data on Friday, the Fed’s Beige Book and US retail sales, will be key focal points for markets. A host of global PMI releases will also provide important insight into the strength of the manufacturing and services sectors worldwide. Of course, ongoing geopolitical tensions following the US–Israeli strikes on Iran over the weekend are likely to play a significant role in shaping overall market sentiment.
Today, UK housing data and US ISM manufacturing, and several PMI releases will garner market interest. Meanwhile, the ECB President Lagarde speaks alongside Nagel and Stournaras. On Tuesday we have eurozone CPI, while in the UK, Chancellor Reeves delivers her Spring Statement outlining the latest economic and fiscal outlook. Fed commentary comes from Williams and Kashkari. A busy Wednesday kicks-off with China’s PMI releases, followed by the Fed’s Beige Book, ADP employment change, services PMI, and the ISM services index. China’s annual “Two Sessions” policy meetings will also be underway. The ECB’s Guindos is due to speak, while the IMF’s Asia in 2050 conference may provide longer-term structural insights. Thursday brings US initial jobless claims, with further ECB commentary from Lagarde, Guindos, and Rehn at separate events. Friday opens with eurozone GDP data, followed by US employment figures and retail sales. Fed speakers include Daly, Paulson, and Hammack, while from the ECB, Schnabel and Cipollone are also scheduled to speak.
Global markets began last week on a cautious footing as escalating tensions between the US and Iran, coupled with renewed trade uncertainty, overshadowed a brief rebound in the software sector. Sentiment deteriorated further after the US announced a 10% global import tariff and military posturing intensified. More hawkish rhetoric from the Fed added to the risk-off tone, reinforcing concerns that policy may remain tighter for longer. The yield on the 10-year UST broke through the 4% level, rallying 14bps last week, closing at 3.94%. Meanwhile, the S&P Index fell 0.44%, and the DXY Index closed 0.19% lower. Oil benefitted from heightened geopolitical tensions; Brent gained 1.00% last week, closing at $72.48pb.
US data added another layer of complexity to the macro backdrop. While consumer confidence climbed to a two-year high, the labour market signals softened beneath the surface, with the share of respondents describing jobs as “hard to get” rising to 20.6%, pointing to a more cautious employment outlook. Inflation data reinforced the case for patience. US PPI rose by a stronger-than-expected 0.5% on the month, driven largely by a sharp increase in services costs. The print underscored the persistence of “sticky” wholesale inflation and supported the argument that price pressures, particularly in services, remain elevated. Against this backdrop, Fed officials, including Bostic, Collins and Barkin, maintained there is no urgency to adjust policy. Policymakers pointed to structural shifts, including the impact of AI, and emphasised the need for clearer evidence of sustained disinflation before considering rate cuts. This steady, and relatively hawkish rhetoric, combined with resilient consumer spending, pushed market expectations for the first rate cut back to July.
Elsewhere, heading into the 2026 National People's Congress, China has reiterated a shift toward supporting its aging population, moving from short-term stimulus to a medium-term demand strategy centred on healthcare and community services. While local governments have adopted more pragmatic, slightly lower retail growth targets, the central policy remains proactive, with a biased lean toward a measured cut as deposit maturities ease pressure on bank margins. Most noticeably, China is pivoting from "Made in China" to "Computed in China," as evidenced by Chinese AI models recently surpassing US models in token volume on platforms like OpenRouter. This "token economy" effectively allows China to export its domestic electricity and infrastructure advantages globally through AI inference, mirroring the cost and scale efficiencies that originally established it as a global manufacturing hub.
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