Inflation will continue to dominate market thinking, and with it the prospect of the timing of rate cuts in the run up to the long Easter break and a shortened trading week.
Inflation in Australia and the US will be in the spotlight and the likely outcomes will not make markets happy as they drink the happy juice ahead of what they think are locked-in rate cuts – sometime this year – but soon.
In Australia it will be focusing on inflation again with monthly Consumer Price Index indicator for February on Wednesday.
AMP chief economist Shane Oliver forecasts the indicator to show a spike to 3.7%yoy from 3.4% in January due to higher fuel, education and housing prices. This will result from a 0.5% month on month increase and base effects as a 0.2% monthly rise will drop out a year ago.
“This should be seen as normal volatility though, with the downtrend likely to remain in place, a bit like we saw in August and September last year.
Other data this week sees a 0.5% rise in retail sales for February (helped by a temporary Taylor Swift boost, according to Dr Oliver) after a 1.1% rise in January, a seventh quarterly fall in a row in job vacancies for February and continued moderate credit growth (all out Thursday).
In the US the focus will be on February core PCE inflation data due Friday which is expected to show a 0.3% monthly rise which would see annual core inflation at 2.8%yoy and unchanged from January.
Other US data for February sees figures on durable goods orders and a personal income and spending in Friday’s PCE data release (That’s Personal Consumption Expenditure).
US home price data is likely to show modest growth with consumer confidence likely to have increased slightly (both out tomorrow).
Thursday also sees the release of the third and final estimate of US 4th quarter GDP for 2023 – the second estimate was 3.2%.
Japanese data for industrial production, retail sales and jobs will be released Friday and are likely to show the impact of the high level of inflation at the moment.
The two activity surveys for March for China will be out Sunday and Monday – the official survey of manufacturing and services will be out on March 31 and the private survey the next day.