Explore Special Offers & White Papers from ADMIS

Macroeconomics: The Day Ahead for 12 April

  • Ukraine war becoming more entrenched and barbaric, China easing some Covid restrictions despite infection rate rise; US CPI tops busier run of data; record Japan PPI and German WPI rises, mixed UK labour data and soft spending to digest; also awaiting German ZEW and US NFIB surveys; Fed speak; OPEC and EIA monthly oil reports; busy run of govt debt sales
  • U.K.: Payrolls growth faltering, wage growth still robust, but negative in real terms, as spending data signals inflation starting to bite
  • US CPI: energy prices to drive headline increase, abetted by by food, housing to continue to pressure core CPI higher

EVENTS PREVIEW

The dark clouds of the war in Ukraine and Russia’s barbarism, along with China’s efforts to contain its Covid-19 continue to cast a long shadow. A busy schedule of data and events awaits, with UK labour data and BRC Retail Sales, German WPI (at a fresh 60-yr high) to digest ahead of the German ZEW and US NFIB surveys, Indian CPI and Industrial Production, but pride of place inevitably goes to US CPI. The ZEW survey is very unsurprisingly expected to see both Expectations (-48.5 vs. March -39.3) and Current Conditions (-35.0 vs. -21.4) drop even further, and it will be interesting to note what happens to the NFIB sub-index on expectations, which has languished close to all-time lows for the past few months (see chart). There is Fed speak from Brainard and Barkin, while both OPEC and the EIA publish monthly oil market reports. A busy day for govt bond supply has auctions in UK, Netherlands and the US (all 10-yr), and Germany (2-yr). Perhaps the most remarkable aspect of recent price action in longer dated bonds is the fact that 10-yr Treasury yields that often track oil prices closely, are now almost trading inversely, as per the attached. It attests to markets belatedly waking up to Fed’s real sense of intent on rates, though 2-yr yields are looking increasingly rangebound (2.50/2.60), suggesting that an aggressive Fed rate path is probably fully discounted. Oil prices remain on a roller coaster ride, unsure whether to focus on weaker Chinese demand and the SPR releases, or on the other hand to focus on structural headwinds to increasing output, above all in products (most notably diesel).

** U.K. – Feb/March labour data **

– The signals from both the UK labour data and BRC Retail Sales suggest that inflation is starting to bite hard into the UK economy, with Payrolls rising just 10K, and perhaps more notably Feb Payrolls revised down sharply to 174K from 275K. Vacancies eminently remain at a record high, and as such slowing employment growth looks for the time being to be more due to skills shortages, than weaker labour demand, but the latter is nevertheless well past its peak. Earnings remain robust, though as previously observed, basic pay is not rising nearly as rapidly as headline, and is also not keeping up with inflation. Consumer spending is clearly losing momentum, as signalled by both the BRC and Barclaycard data, with the BRC observing that while spending “remained above last year this likely reflects higher prices”, and Barclaycard noting a surge in spending volumes on auto fuel.

** U.S.A. – March CPI **

– US CPI is expected to post a 1.2% m/m rise to take the y/y rate up to 8.4%, the highest January 1982, with energy prices (above all gasoline, up some 19.0% m/m) expected to be the biggest contributor, though food and housing (OER) will also be significant. The latter will be the element pushing up core CPI up 0.5% m/m, to take the y/y rate to 6.6%. This should be the peak month for CPI, as the drop back in energy prices and above all base effects kick in from April. Will this make much difference to the Fed’s May rate decision? No, their focus will be on how much m/m increases decelerate in coming months (if they do), and how this combines with more benign base effects.

To view the full report and to sign up for daily market commentary please email admisi@admisi.com

The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2022 ADM Investor Services International Limited.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore Special Offers & White Papers from ADMIS

Get Started