Events to Look Out for Next Week – Money Market Multiplier

The first quarter Earnings reports continue at full steam ahead, and after the strong performances from the technology mega caps last week, this week sees the biggest of them all, APPLE, report on Thursday. Other companies reporting this week include Pfizer, BP, Shell and HSBC. The week will be dominated by Central Bank interest rate announcements led by the FOMC, ECB & RBA along with PMI data and the crucial US Non-Farm payroll announcement.

Monday – 01 May 2023

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International Labour Day – Many Global Markets inc. (CNY, UK, EZ & CHF), Closed –
ISM Manufacturing PMI (USD, GMT 14:00) – The ISM index is expected to edge up to 46.5 in April, after a drop to a 3-year low of 46.3 in March. We saw an 18-year high of 63.7 in March of 2021, an 11-year low of 41.6 in April of 2020. Producers are facing big headwinds from elevated interest rates, recession fears, and tightening credit conditions, but have benefited from the need to rebuild inventories following a prolonged period of supply chain disruptions.

Tuesday – 02 May 2023

RBA Rate Statement (AUD, GMT 04:30) – The expectations are that the RBA will leave interest rates unchanged at 3.60 per cent. Westpac predicts the cash rate will peak at 3.85 per cent, and stay there for the second half of 2023, with rates coming down in the first quarter of 2024. Westpac economists expect the cash rate to fall to 2.35 per cent by mid-2025. Governor Lowe will speak later in the day at GMT 11:20.
CPI Flash Estimate (EUR, GMT 09:00) – Eurozone HICP inflation was confirmed at 6.9% y/y, core inflation at 5.7% y/y. The March readings were higher than expected and while the headline declined markedly versus the 8.5% y/y in February. the April numbers are expected to show a fall to 7.1% y/y and the key core actually rising to 5.9% y/y. Inflation continues to remain sticky.
JOLTS Job Openings (USD, GMT 14:00) On the last business day of February, the number and rate of job openings decreased to 9.9 million (under 10 million for the first time since July 7 2021) (-632,000) and 6.0 percent, respectively. The largest decreases in job openings were in professional and business services (-278,000); health care and social assistance (-150,000). The number of job openings increased in construction (+129,000) and in arts, entertainment, and recreation (+38,000). A further decline to 9.75 million is expected this month.
Employment Change & Unemployment Rate (NZD, GMT 22:45) last Quarter (Q4 2022) employment New Zealand change recorded a weak 0.2% gain, with a significant recovery to 0.6% expected for Q1 2023. Th eunenempoyemnt rate is expcted to decline a tick to 3.3% for the first three months of 2023 from 3.4% in the final quarter of 2022.

Wednesday – 03 May 2023

ADP Non-Farm Employment Change (USD, GMT 12:30) – ADP analyzes payroll data from more than 25 million workers to estimate the private payroll changes. Although designed to correlate with the official NFP data it has diverged recently, even following a major revision last year. Last month changes were a gain of 145k and this month they are expected around the 142k level.
ISM Services PMI (USD, GMT 14:00) The ISM index should rise to 52.0 from 51.2, versus a 3-year low of 49.2 in December, an all-time high of 68.4 in November of 2021, an 11-year low of 41.8 in April of 2020, and an all-time low of 37.8 in November 2008. We’re seeing an ongoing producer sentiment pull-back from robust peaks in November of 2021, with many of the various component categories now in contraction territory.
FOMC Rate Statement & Press Conference (USD, from GMT 18:30) The FOMC increased the funds rate band by 25 basis points, as widely expected last time, to a 4.75% to 5.0% range. This was a ninth straight hike to the highest rate since 2007. The vote was a unanimous 11-0. Expectations have swirled since then and another 25 bp seem near certain. Discussions will be focused on if this is sufficient and a pause for the rest of the year is appropriate or if it is still too soon to signal such a thing with inflation remaining sticky, and a pivot in 2023 is unlikely.

Thursday – 04 May 2023

ECB Rate Statement & Press Conference (EUR, from GMT 12:15) – Last time the common currency central bank went with the previously transmitted 50 bp rate hikes with the deposit rate lifted to 3.00%, and the refi rate to 3.50% with a promise to “monitor financial market developments” and Ms Lagarde refraining from committing to additional policy moves, while stressing the need for data dependency against the background of high uncertainty. Some Hawks are talking at least 3 more 25 bp hikes, others a maximum of 2. 25 bp are expected with an outside chance of 50 bp to “get the job done”.
US Initial Jobless Claims (USD, GMT 12:30) – Last week jobless claims dropped -16k to 230k, lower than expected, after rising 6k, to 246k in previous week and climbing 12k to 240k in the April 8 week. The 4-week moving average fell to 236k after slipping to 240k. Job tightness was back in focus after a tick higher. A tad higher and back to 235k is expected.

Friday – 05 May 2023

Event of the Week – Non-Farm Employment Change (USD, GMT 12:30) – Expectations are for a 170-180k April nonfarm payroll increase, after gains of 236k in March, 326k in February, and 472k in January. An uptrend for the claims data in April implies downside payroll risk. In the last expansion, we saw a 3.5% peak for y/y wage gains in both February and July of 2019, before the pandemic-boost to an 8.0% peak in April of 2020. The ensuing strength in wage gains has allowed continued robust y/y increases, though the return of low-paid workers to the workforce is likely restraining wage increases.
Employment Change & Unemployment Rate (CAD, GMT 12:30) – Canadian jobs are expected to decline 1.2k from a robust 34.7k last month, 21.8k in March and a current cycle and 12 month high at 150.0k in February. The Unemployment rate is expected to remain unchanged at 5% for a fifth consecutive month.

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Stuart Cowell

Head Market Analyst

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