Week Ahead
The US employment report (Fri), global PMIs, the OECD Economic Outlook, central bank commentary, and developments surrounding the US-Iran peace agreement are set to dominate market attention this week.
Today's calendar includes eurozone unemployment and inflation expectations, UK Nationwide house prices, and US ISM manufacturing and construction spending data. On Tuesday, investors will focus on eurozone CPI, UK mortgage approvals, and US JOLTS job openings. Fed officials Kashkari and Hammack are scheduled to speak, while former US Treasury Secretary Yellen will assess Jerome Powell's tenure as Fed Chair. Comments from Bank of England’s Bailey and Megan Greene are also expected.
Wednesday brings China's Caixin Services PMI, eurozone PPI, US factory orders, durable goods orders, the ISM Services Index, and the Fed’s Beige Book. US Treasury Secretary Scott Bessent will testify on the Treasury's budget, while Fed President Logan is also due to speak. Thursday's focus shifts to eurozone retail sales and US initial jobless claims. The week concludes with eurozone GDP and the closely watched US employment report. Expectations currently point to non-farm payroll growth slowing to around 89,000, while the unemployment rate is expected to remain unchanged at 4.3%.
Markets last week were largely driven by easing geopolitical tensions following a tentative 60-day US-Iran ceasefire agreement and plans to reopen the Strait of Hormuz. US economic data painted a mixed picture, with first-quarter GDP revised down to 1.6% while Core PCE inflation came in as expected at 3.3%, helping to alleviate concerns that the Fed may need to tighten policy further. Against this backdrop, and supported by continued enthusiasm surrounding AI, the S&P 500 gained 1.43% to reach fresh record highs. The US dollar weakened, while 10-year Treasury yields strengthened 12bps to 4.44%. Oil prices sharply reversed, Brent fell more than 11% over the week to around $92pb as geopolitical risk premia unwound.
Chinese PMI data released over the weekend and this morning were broadly encouraging. While the official manufacturing PMI was largely unchanged, the non-manufacturing index strengthened further into expansionary territory. This morning's Caixin Services PMI eased modestly to 51.8 but remained comfortably above the 50 threshold that separates expansion from contraction. The renminbi continued its recent appreciation, strengthening beyond 6.77 against the US dollar to its strongest level since February 2023. The move reflects a combination of improving external conditions and robust domestic fundamentals. A structural surge in technology exports, fuelled by global investment in AI infrastructure, has generated strong demand for Chinese semiconductors, servers, and related hardware. The resulting trade surplus has encouraged exporters to convert a growing share of their foreign currency earnings into renminbi, providing additional support for the currency.
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