The US jobs report is the expected macroeconomic highlight of a Easter-shortened coming week, with the start of April also bringing a new round of other major data.
UK macro
For the UK, there are important PMI survey updates on the services and manufacturing sector, and some potentially interesting releases from the Bank of England, Office for National Statistics and on the housing sector.
The BoE decision maker survey on Thursday, its in-house survey of chief financial officers, is notable, said James Knightly at ING, even though the Bank’s monetary policy committee said it most focused on watching services inflation and wage growth to guide policy this year.
This CFO survey has been pointing to less aggressive expectations of price rises among companies, though wage growth expectations have been stuck at around 5% until easing in the February survey.
If pay growth is scaled back further, it “won't move the dial” for the BoE's May meeting as a rate cut remains “unlikely”, but Knightly says progress on this measure coupled with some favourable CPI data for April/May, “could bring a June cut into play”.
Housebuilding investors will be watching the mortgage approvals on Tuesday and Halifax house price survey on Friday.
So will many estate agents and other industry players, said Danni Hewson at AJ Bell: “It will be interesting to see if the possibility of interest rate cuts from the Bank of England this year, and the attendant reductions in mortgage rates this should bring, will provide a boost to demand.”
US macro
All eyes will be on the US jobs report next Friday, said Deutsche Bank analyst Galina Pozdnyakova, noting her economist colleagues expect gains in payrolls to cool to +200k in March from +275k last month, which is in line the wider Wall Street consensus.
The market expects the unemployment rate to remain at 3.9% (Deutsche expects a fall to 3.8%) and hourly earnings growing at a faster pace of 0.3% month on month, up from 0.1%.
Ahead of the Friday print, the JOLTS and ADP reports are due on Tuesday and Wednesday, respectively.
Jobs are something the US Federal Reserve pays close attention to.
Policymakers are continuing to “play a waiting game” when it comes to that first interest rate cut of this cycle, said analyst Dan Coatsworth at AJ Bell.
Markets now expect the first rate cut in June with two more this year, with three more next year, according to the CME Fedwatch service.
“The Fed may have November’s presidential election in mind (it is unlikely the FOMC will want to be seen rocking the boat or running policy that leads to a recession) and the burgeoning Federal deficit, which now leaves the US with an annualised interest bill of $1 trillion, even if the Fed is avowedly impartial when it comes to the former and Mr Powell is on record as dismissing the latter as a consideration,” Coatsworth said.
Focus on the Fed’s next moves will also continue with speakers during the week including Chair Jerome Powell on Wednesday.
“Investors will also focus on economic activity signals from the ISM index on Monday and the services gauge on Wednesday, especially when it comes to signals from the price and employment components,” Pozdnyakova said.
Japan and Europe
While the US, UK and Europe obsess over the timing of rate cuts, the Bank of Japan is starting to go the other way.
BoJ governor Kazuo Ueda this month triggered the country’s first increase in headline borrowing costs in seventeen years, in response to the strongest spring wage round for more than three decades and inflation that is consistently exceeding a 2% target.
The coming week’s big in Japan news is the Tankan short-term economic business survey, which analysts say could give the BoJ, government and investors an inkling of how corporates are thinking.
In the eurozone, the data under the market microscope will be inflation and the labour market.
Flash eurozone CPI inflation is released on Wednesday, having been high month-on-month in February and January.
“For the European Central Bank, it will not be easy to look through all of this ahead of the April governing council meeting – but as ECB President Christine Lagarde stated at the March press conference, we’ll know a lot more in June,” said ING’s Bert Colijn.