18 April 2022 – The Week Ahead

In the week ahead, we provide you with all the necessary to build your strategy during the upcoming week with extra knowledge and up-to-date updates.

The Outlook:

The focus is on inflation data

Crude oil supply is a key

In the U.S.

The U.S. jobs market is expected to add around 195,800 new jobs this upcoming week. However, in the week ending April 9, the adjusted initial claims figure was 185,000, an increase of 18,000 from the previous week’s revised level. Keeping in mind the previously announced rise in the nonfarm payroll employment by 431,000 in March and the unemployment rate decline to 3.6%.

Meanwhile, market participants await the Federal Reserve (Fed) chairman Jerome Powell. It is expected to find within his words answers to many questions related to the monetary policy and inflation control plan, with inflation rising to the highest level since 1981 (a year before the recession of 1982-1983).

Equity indices are expected to continue falling as the 10-year U.S. Treasury yield touched a three-year peak last week and is expected to continue rising. The increase in treasury yield will help the U.S. dollar index to continue pushing against its major peers.

U.S. Major in The Week Ahead

Date	Event	Forecast	Previous
18-Apr	FOMC Member Bullard Speaks
20-Apr	Existing Home Sales	5.78M	6.02M
21-Apr	Philly Fed Manufacturing Index	20.6	27.4
21-Apr	Unemployment Claims	190K	185K
21-Apr	Fed Chair Powell Speaks
22-Apr	Flash Manufacturing PMI	58.1	58.8
22-Apr	Flash Services PMI	58	58

In Europe

The European economy is suffocating from inflation and the war between Russia and Ukraine. The increase in energy and food prices damages the incomes, forcing individuals to expend more on essentials. And with China slowing down, European exports will inevitably come under pressure.

The risk of a recession is rising as inflation is out of control. Meanwhile, the European Central Bank (ECB) has to raise interest rates, but that will further hurt the economy.

There will be the release of the German PMI numbers for manufacturing and services on Friday, which will show exactly how high the risk of recession is. Forecasts point to only a minor decline, with both the manufacturing and services indices set to remain comfortably above the 50 thresholds.

Finally, the final TV debate is scheduled for Wednesday to finalize the French elections file. Opinion polls ran at 53% for Macron against 47% for Le Pen.

European Major in The Week Ahead:

Date	Event	Forecast	Previous
21-Apr	ECB President Lagarde Speaks
22-Apr	French Flash Services PMI	56.4	57.4
22-Apr	German Flash Manufacturing PMI	54.6	56.9
22-Apr	German Flash Services PMI	55.4	56.1
22-Apr	ECB President Lagarde Speaks
24-Apr	French Presidential Election

In China

China released inflation data earlier this week, but investors will likely be more focused on March figures on retail sales, fixed-asset investment, and industrial production for a more up-to-date view of how coronavirus lockdowns are impacting the world’s second-largest economy.

China’s annual inflation rate rose to a three-month high of 1.5% in March 2022 from 0.9% in the previous two months and above market estimates of 1.2%. China set a target of CPI at around 3% for this year, the same as in 2021. On a monthly basis, consumer prices suddenly were flat in March, compared with the consensus of a 0.1% drop and after a 0.6% rise in February. 

In United Kingdom

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 5.5% in the 12 months to February 2022, up from 4.9% in January. This is the highest recorded 12-month inflation rate in the National Statistic series which began in January 2006, and the highest rate since CPIH stood at 6.2% in March 1992 in the historic modeled estimates.

The Consumer Prices Index (CPI) rose by 6.2% in the 12 months to February 2022, up from 5.5% in January. This is the highest CPI 12-month inflation rate in the National Statistic series which began in January 1997, and the highest rate in the historic modeled series since March 1992, when it stood at 7.1%.

The U.K. is due to release PMI data on Friday which may begin to show some of the economic impact of the war in Ukraine. On the same day, the U.K. is to publish March data on retail sales

U.K.’s Major in The Week Ahead

Date		Forecast	Previous
21-Apr	BOE Gov Bailey Speaks
22-Apr	Retail Sales m/m	-0.30%	-0.30%
22-Apr	Flash Manufacturing PMI	54.3	55.2
22-Apr	Flash Services PMI	59.9	62.6
22-Apr	BOE Gov Bailey Speaks

Crude oil

Crude Oil settled higher ahead of the long Easter weekend on Thursday with news that the EU might phase in a ban on Russian oil imports underpinning prices. The phased-in approach is designed to give Germany and other countries time to arrange alternative suppliers.

The proposed EU ban will be put up for debate only after the final round of the French presidential election on April 24 to avoid damaging President Emmanuel Macron’s chances of re-election.

The EU has already implemented five rounds of increasingly harsh sanctions against Russia since its invasion of Ukraine but is under pressure from its allies to do more. However, the bloc is ill-equipped to deal with the economic fallout from banning oil imports from what is its largest supplier.

Despite signals that global supply disruption will persist, oil stocks in the U.S. rose by more than nine million barrels last week, the U.S. Energy Information Administration said on Wednesday, driven in part by releases from the nation’s strategic reserves.