Week Ahead
The US employment report on Friday will be the key macro event for markets this week, set against an ongoing backdrop of geopolitical tension. Ahead of that, Monday brings eurozone confidence indicators, UK mortgage approvals, and remarks from The Fed’s Williams. Tuesday is particularly data-heavy, with China’s official PMIs, eurozone CPI, German unemployment, UK GDP and house prices, later we have the US Conference Board Consumer Confidence and JOLTS job openings. Central bank commentary will also be in focus, including contributions from The Fed’s Goolsbee and ECB officials Müller, Kazimir, Panetta and Sleijpen, as markets weigh persistent inflation pressures against softening growth. On Wednesday, global PMIs will be released alongside US retail sales, ISM manufacturing index, and ADP employment change. The Fed’s Musalem is also scheduled to speak. Thursday sees US initial jobless claims and trade data, with further Fed commentary from Logan. The week concludes with China’s Caixin PMIs, the US non-farm payrolls report, expected at +60k, and the US S&P Global PMI.
It was another volatile week across asset classes. Escalating conflict and attacks on energy infrastructure in the Middle East pushed Brent crude higher to $112.57pb. Rhetoric from the US administration did little to stabilise sentiment, with the S&P 500 falling 2.12%. This extended losing streak is the longest the market has seen in nearly four years. Concerns around “human intelligence displacement” following the release of increasingly capable AI agents also weighed on sentiment, particularly across software and financial services. Investors are beginning to reassess the long-term earnings resilience of traditional white-collar service models. Outside of the US dollar, Bitcoin and commodities, there was effectively nowhere to hide. Even traditional diversifiers such as gold came under pressure, as investors sold liquid assets to meet margin calls and adjust to rising US Treasury yields; the 10-year rose 5bps to 4.43%
US data painted a picture of a strained consumer and a slowing economy University of Michigan’s consumer sentiment index dropped to its lowest level since late 2025 due to rising gas prices and geopolitical uncertainty. Coupled with S&P Global’s survey showing higher business input costs and slowing services activity, the data suggests that inflation remains sticky while economic growth cools This weighed heavily on markets, as it diminishes the likelihood of near-term interest rate cuts and dampens consumer confidence.
The OECD’s Interim Economic Outlook released last week presents a global economy caught between two opposing forces: a booming artificial intelligence sector and a severe energy shock from the escalating geopolitical conflict. While global GDP growth is holding steady at a projected 2.9% for 2026, the report warns that the war has effectively erased an expected growth upgrade, with G20 inflation forecasts jumping to 4.0%, 1.2% higher than previously anticipated. The outlook is increasingly polarised by region, as the forecasted expansion in the US (2.0%) and India (6.1% growth) show resilience through tech investment, while expected growth in the eurozone (0.8%) and the UK (0.7%) face significant slowdowns due to their higher exposure to soaring oil and gas prices. Ultimately, the OECD cautions that if disruptions in the Strait of Hormuz persist, central banks will be forced into a higher-for-longer interest rate stance, further dampening the global recovery.
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