Week Ahead
This week carries plenty of market-moving potential with major central bank decisions, plenty of global corporate earnings, and ongoing geopolitical risks in focus. Sentiment is also likely to be shaped by developments in the Middle East, with the Israel–Lebanon ceasefire entering a critical phase today, while stalled US-Iran negotiations continue to add to regional uncertainty. Tuesday begins with the BoJ rate decision and quarterly outlook report, followed later by the US Conference Board Consumer Confidence release. Markets will also watch Eurozone sentiment data, German CPI, and US housing starts for further clues on regional growth and inflation trends. Attention then turns to the FOMC meeting, where the Fed is widely expected to leave rates unchanged. The key focus will be on any guidance from Chair Powell’s presser. Thursday starts with China PMI data, offering an early read on global manufacturing momentum. The BoE and ECB policy decisions will also be central events, with markets especially focused on commentary from Andrew Bailey and Christine Lagarde. Additional releases include Eurozone CPI, GDP and unemployment, alongside US GDP, personal income, and initial jobless claims. The week concludes on Friday (May Day) with Japan CPI, UK and US PMI surveys, and the US ISM Manufacturing report, rounding off an important week for assessing the global growth and inflation backdrop.
Last week market sentiment was driven by broadly strong Q1 corporate earnings, particularly in the tech sector, and rising anxiety over geopolitical instability. Asset classes simultaneously focused on Senate testimony from Fed Chair nominee Kevin Warsh, parsing his remarks for clues regarding the future path of interest rates. The US 10-year Treasury yield rose 5bps to 4.30%, while the S&P Index rose to further highs, up 0.55% on the week. Brent crude pierced through $100pb again, gaining 16.54%. The dollar enjoyed its first weekly gain this month, with the DXY Index up 0.44%.
US data last week painted a mixed but still resilient macro picture. Retail sales came in stronger than expected, though much of the upside was driven by price effects and energy-related spending, raising questions over the strength of underlying real consumption. Tariff pass-through continues to be a key theme, with goods inflation remaining sticky and feeding into both corporate input costs and household budgets. Attention also centred on the University of Michigan survey, where consumer sentiment ticked up modestly from its initial lows but remained near historic troughs. Inflation expectations were marginally unchanged. The 1-year outlook edged down slightly to 4.7%, while the 5–10 year measure ticked up to 3.5%. Markets also monitored Senate confirmation hearings for Kevin Warsh for any insight into the future Fed policy stance, while trade policy uncertainty remained a key overhang, with ongoing Section 301 and 232 tariff investigations keeping businesses cautious around future input cost risks.
In China, policy remained steady and supportive, with the PBoC holding rates at 3.00% and maintaining a cautious, moderately accommodative stance focused on stabilising growth while preserving financial stability. Currency management continued under a tightly managed floating regime, with emphasis on FX stability and avoiding disorderly depreciation. Importantly, industrial profits showed a clear rebound, reinforcing signs of improving cyclical momentum in manufacturing and suggesting early stabilisation in corporate earnings. However, this recovery remains uneven and closely managed, with authorities simultaneously tightening oversight of financial channels, including new rules on online financial marketing and crackdowns on illicit FX and virtual currency activity, highlighting a continued focus on containing systemic risk while supporting a gradual and controlled recovery.
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