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Macro

Saxo Spotlight: What’s on investors & traders radars this week? Tracking recession risk and more central bank meets

APAC Research

Summary:  After the Fed’s preferred inflation gauge cooled more than expected, US jobs data will be in full focus this week. If the data sets show the economy is reaccelerating, a risk off narrative could return to markets, which could trigger upside in bond yields and downside in key indices. Plus, markets will also focus on tracking recessionary risk via PMI prints, manufacturing output and trade data. In APAC, the RBA and RBNZ meet to decide on interest rates, with two banks grappling with very different issues. While the NZD could whipsaw up, the AUD could face pressure.

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Investors are getting loads of data on the US labor market this week

Investors will assess the latest status of the US job market from a series of labor market prints, kicking off Tuesday with the JOLTS job openings report on Tuesday, which is expected to slow to 10,500K in February from 10,820K in January. The next day, the March ADP private employment report is expected to show that job growth somewhat decelerated to 210K from 242K the prior month but remains overall strong (according to Bloomberg’s survey). Initial jobless claims due on Thursday, are expected to increase by 200K. The focus of the week, is the employment report due Friday, in particular the non-farm payroll, unemployment rate, and average hourly earnings prints. According to Bloomberg’s survey of economists, non-farm payrolls are expected to grow solidly at 240K in March and unemployment stays at 3.6%. Consensus estimates for the average earnings are 0.3% M/M (February 0.2%) and 4.3% Y/Y in March (February 4.6%)

US ISM Manufacturing is expected to slip further into contraction while the Services index remains in expansion

According to the survey by Bloomberg, analysts are expecting the March ISM Manufacturing Index to slip to 47.5, further into the contraction territory, from 47.7 in February. In addition to the headline, the focus will be on employment, new orders, and price-paid components. Meanwhile, the ISM Services index, due on Wednesday, is expected to edge down to 54.3 in March from 55.1 prior month but stays in expansion.

European pulse checks in focus: Germany industrial production and BOE Decision Maker Panel Survey

After Euro-zone CPI came out softer-than-expected in the March quarter, with headline CPI falling from 8.5% Y/Y in February to 6.9%, focus this week will be on if other indicators are accelerating, which could support the ECB’s hawkish stance. In Germany, on Thursday April 6, we expect industrial production to have shown little momentum in February, after a strong rise in January. Despite higher energy costs, supply-chain issues, and tighter monetary policy, the industrial sector in Germany has shown some resilience. Also on Thursday, the Bank of England’s Monetary Policy Committee will monitor the March Decision Maker Panel Survey, to look for signs of inflationary persistence. 

Why the RBA will likely pause rate hikes on Tuesday, but economists are sitting on the fence 
Australian’s households are somewhat experiencing a pressure cooker moment, with inflation remaining at 30-year high, despite cooing. The RBA previously warned the ‘full effect’ of its 10 interest rate rises have yet to be seen, which is one of the reason the futures are expecting the RBA to keep rates unchanged at Tuesday’s meeting. While market consensus expects a hike of 25bps. The RBA warned that 880,000 Australians roll off fixed mortgages to variable, which could cause a cash flow shock, while Roy Morgan suggests over 1 million mortgages are deemed ‘at risk’. Scores of Australian banks have already cut mortgages rates, yet we believe the RBA may be forced to pause rate hikes. We explore what a pause could mean for investors and tradersplus why AUDUSD could remain pressured, with the Fed having more room to hike vs the RBA. 

The Reserve Bank of New Zealand’s (RBNZ) meeting is also in focus 

On Wednesday the RBNZ meeting outcome, will watched like a hawk with a hike not ruled, out as inflation concerns remain front and centre. The big story in NZ, is that inflation risks relating to the cyclone recovery are picking up, in an already capacity-constrained economy. And this should support the NZD this week. Keep an eye on the NZDUSD and the AUDNZD. 

The third largest brewer Constellation Brands to report earnings 

A major beer producer in the US, is due to report earnings before the opening bell on Thursday. With its Corona and Modelo labels being seen as premium priced beers, the company may see its beer sales dip especially with disposable incomes being increasingly stressed. For the fourth quarter, the slowdown in beer depletion could continue, while shipment volumes for the product segment could see its first year-on-year contraction since the quarter ending Aug 2020. 

Consumer spending bellwether, Walmart (WMT) holds its first in-person investor day since 2020

Walmart, the consumer spending bellwether and retail giant will hold its first in person investor day since Feb 2020. It’s expected to divulge insights into the state of the consumer. Eyes will be on its long-term growth outlook targets, and cost-saving initiatives. Plus its alternative revenue streams including Walmart Marketplace, Walmart Connect, which is the advertising business, Walmart Fulfillment Services, Walmart Luminate (data) and its health services will be a focus. If Walmart maps out operational cost cutting initiatives and additional revenue streams, it could result in greater earnings per share over time. 

Earnings to watch

The earnings calendar this week is light ahead of quarterly earnings season kicking off, so the equity market will focus on tracking recessionary risk via PMIs, jobs data and credit reports.

This week company news releases

- Monday: BOE Technology
- Wednesday: Industrivärden, Conagra Brands, Sodexo
- Thursday: Seven & I, RPM International, Lamb Weston Holdings Inc, Constellation Brands
- Friday: Aoen, Yaskawa Electric, Will Semiconductor Co Ltd Shan, Bank of Beijing Co Ltd

This week’s economic key events

Monday 3 April
-
Taiwan Market Holiday
-
Worldwide Manufacturing PMIs, incl. global PMI*
-
Japan Tankan Survey (Q1)
-
Indonesia Inflation (Mar)
-
Switzerland CPI (Mar)
-
United States Construction Spending (Feb)
-
United States ISM Manufacturing PMI (Mar)
-
Germany Industrial Orders (Feb)
-
Germany Manufacturing Output (Feb)Canada Unemployment Rate (Mar)

Tuesday 4 April

-India, Taiwan Market Holiday
-South Korea CPI (Mar)
-Australia RBA Cash Rate (Apr)
-Germany Trade (Feb)
-Eurozone Producer Prices (Feb)
-Canada Trade Balance (Feb)
-United States Factory Orders (Feb)
-United States JOLTS Job Openings (Feb)

Wednesday 5 April

-China (Mainland), Hong Kong, Taiwan, Norway, Market Holiday
-Worldwide Services, Composite PMIs* (5-6 Apr)
-Philippines CPI (Mar)
-New Zealand Cash Rate (5 Apr)
-Thailand CPI (Mar)
-Norway Manufacturing Output (Feb)
-United Kingdom Reserve Assets (Mar)
-Canada Leading Index (Mar)
-United States ADP National Employment (Mar)
-United States International Trade (Feb)
-United States ISM Non-manufacturing PMI (Mar)

Thursday 6 April
-
Australia, China (Mainland), Thailand, Philippines, Norway Market Holiday
-
Hong Kong S&P Global PMI* (Mar)
-
China (Mainland) Caixin Services PMI (Mar)
-
India Repo and Reverse Repo Rate (6 Apr)
-
Switzerland Unemployment Rate (Mar)
-
Germany Industrial Output (Feb)
-
United Kingdom Halifax House Prices* (Mar)
-
United States Initial Jobless Claims
-
Australia Trade Balance (Feb)

Friday 7 April
-
Australia, New Zealand, China (Mainland), Hong Kong, Singapore, Indonesia, Philippines, India, Germany, Switzerland, Norway, UK,
-
US, Canada Market Holiday
-
Japan All Household Spending (Feb)
-
United States Non-Farm Payrolls, Unemployment, Average Earnings (Mar)

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