Macroeconomic/ geopolitical developments
- The financial markets have been less dominated by the Russian invasion of Ukraine, as a lack of any significant escalation has seen a further shift towards more of a “risk on” theme for stocks since mid-March.
- There have also been hopes from the Ukraine/ Russia talks and also from reported setbacks suffered by Russian troops.
- US Yield curve inversion has grabbed the headlines in latter March with both the 5-30 and 2-10 year segments of the curve inverting, a warning signal of possible recession in the following 1-2 years.
- The US Employment report saw the Unemployment rate fall more than anticipated to 3.6%, whilst the Non-Farm Payroll job gains came in at 431K versus an expected 490K.
- Global Markit and US ISM Manufacturing PMI data on Friday broadly missed consensus estimates.
- Russia has threatened to halt natural gas supplies to Europe if not paid in Rubles.
- Bond buying intervention from the Bank of Japan (BoJ) saw huge purchases of JGBs as the BoJ kept the 10 year yield below its 0.25% level.
Global financial market developments
- Global stock averages were again mostly higher last week bit with US averages posting their first losing quarter since Q1 2020 when the global pandemic hit.
- US and global bonds sold off further and then rebounded to lower yields as the US Bond market suffered its worst quarter since 1980!
- The US Dollar has been mixed again, in consolidation, dipping and rebounding.
- Gold, Oil and Copper have all moved into erratic consolidation phases since March blow-out tops were established, with Gold neutral, Oil with a negative bias and Copper with a positive tone.
Key this week
- Geopolitical focus:
- Monitoring for a possible military escalation in Ukraine.
- Also closely watching for potential for Ukraine/ Russia talks to improve and maybe for a ceasefire.
- Central Bank Watch: We get Governor Bailey of the Bank of England speaking on Monday and the Reserve Bank of Australia (RBA) interest rate decision and statement on Tuesday and the Federal reserve Open Market Committee (FOMC) meeting minutes on Wednesday.
- Macroeconomic data: A light data week with the global Markit and US ISM Services and Composite PMIs the standouts on Tuesday.
| Date | Key Macroeconomic Events |
| 04/04/22 | BoE Governor Bailey speaks |
| 05/04/22 | RBA interest rate decision and statement; global Markit and US ISM Services and Composite PMIs |
| 06/04/22 | FOMC meeting minutes |
| 07/04/22 | EU Retail Sales |
| 08/04/22 | Canadian Employment report |
