Market movers ahead
- In the US, the coming week brings CPI figures for March. We forecast CPI core increased 2.3% y/y while headline likely increased 2.8% y/y, i.e. we expect to see the acceleration in inflation turn into deceleration. Note that while these numbers are well above 2%, the Fed is more concerned about PCE core inflation, which is still below 2%.
- The coming weeks also bring a few speeches by FOMC members, where the focus is on the Fed’s intention to start quantitative tightening soon, see FOMC minutes: Quantitative tightening is moving closer, 5 April.
- In the euro area, the Sentix investor confidence and German ZEW expectations are due out next week.
- In the UK, the most important data release next week is the CPI inflation data for March. We expect total CPI rose 0.4% m/m in March implying an unchanged inflation rate at 2.3%. We still expect CPI inflation to move higher this year and to peak around 3%. Despite higher inflation, the Bank of England will likely remain on hold through the Brexit negotiations, see also Bank of England Review: Maintains neutral stance with hawkish twist, 16 March.
Global macro and market themes
- Mounting signs that the global business cycle is peaking.
- We expect a pause in the equity bull market and that risk factors move back to the fore.
- We still expect the bond bear market is over for now.
- Fading reflation supportive for the USD. We expect short-term USD strength but weakening longer term.
- Positive start to Trump-Xi meeting – but differences on trade will come into focus in H2.
