The Macro Week Ahead: RBA and BOE meetings, China Trade and U.S. Consumer Confidence
The Macro Week Ahead: RBA and BOE meetings, China Trade and U.S. Consumer Confidence
By:Ilya Spivak
Stock markets cheered as soft U.S. jobs data revived Fed rate cut hopes. Can Wall Street sustain upward moment?
- Australian dollar, British pound at risk on dovish RBA and BOE guidance.
- Soft Chinese trade and inflation data may revive global recession fears.
- U.S. consumer confidence miss might spook stock Fed-minded markets.
For stock markets, April’s U.S. jobs report proved to be a more decisive moment than the seesaw response to a much-anticipated Federal Reserve monetary policy announcement earlier last week.
The outcome put the labor market on a somewhat softer footing than consensus forecasts reckoned, and Wall Street cheered, as expected.
By the end of the week, the bellwether S&P 500 and the tech-leaning Nasdaq 100 scored gains of 0.5% and 0.9% respectively, shaking off early losses. Treasury yields fell across the curve as markets walked back some of the earlier hawkish shift in Fed rate cut expectations.
The U.S. dollar weakened, losing the most against the Japanese yen after local authorities appeared to intervene twice to prop up the currency. Despite these would-be tailwinds, gold fell for a second week as the divergence from familiar price dynamics continued. Crude oil prices fell amid hopes for a ceasefire between Israel and Hamas.
Here are the macro waypoints that are likely to shape price action in the week ahead.
Reserve Bank of Australia (RBA) interest rate decision
Australia’s central bank is expected to keep its target interest rate unchanged at 4.35% at this week’s policy meeting. Priced-in expectations have changed dramatically since the conclave in March. The markets erased hopes for a rate cut this year after first-quarter inflation data released two weeks ago topped expectations.
The spotlight now turns to the tone of the policy statement released alongside the policy decision. If RBA Governor Michele Bullock invokes sign of ongoing economic weakness to push back on the markets hawkish repositioning, the Australian dollar may retreat from recent highs.
China imports and exports data
China’s import and export growth are expected to return to positive territory in April after dual negative readings in the prior month.
Later in the week, consumer price index (CPI) inflation is expected to remain narrowly positive at 0.1% while the wholesale producer price index (PPI) slides 2.3% year-over-year, the smallest drop since February 2023.
Analytics from Citigroup show Chinese economic data outcomes have weakened relative to forecasts in recent weeks. That might set the stage for disappointing results that revive worries about a global economic downturn, especially in the wake of soft U.S. jobs data. Stock markets might wobble if talk of recession re-emerges.
Bank of England (BOE) interest rate decision
BOE policymakers are expected to keep the target rate steady at 5.25%.
However, signs of broadening disinflation in the latest CPI data might make for a more dovish tone from Governor Andrew Bailey and company. If that moves at least one more official to favor a cut when the votes are tallied, the British pound may fall.
U.S. consumer confidence
The University of Michigan (UofM) survey of U.S. consumer confidence is expected to show sentiment held steady near three-year highs in May.
Respondents’ mood has been steadily improving since one-year inflation expectations began to fall in mid-2022.
If recently hotter-than-expected price growth measures disrupt this dynamic and bring disappointing results, the markets might reckon that a Fed concerned about sticky prices will be comparatively more reticent to cut interest rates. That might undo some recent loosening of policy expectations and weigh on Wall Street.
Ilya Spivak, tastylive head of global macro, has 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.