Weekly Outlook, 19 – 23 April

Earnings Reports and Interest rate decisions! 

By: Ahura Chalki

Market analyst – IFC Markets

Inflation worries have faded as the 10-year yield continues to soften. On the other hand, better than expected reports from bank stocks sent Wall Street to the new levels to send the VIX equity volatility at year lows. In the week ahead, we must look at BoC and ECB policy meetings and conferences. Simultaneously, the economic calendar will also be jam-packed by leading indicators such as Eurozone, UK, Canada, and New Zealand Inflation data. Also, Retail Sales and PMI from the U.S., Europe, and the U.K.

Earnings Reports

The latest data from “Refinitv” to the end of this week, April 14. confirms that money market funds (those that invest in cash, deposits, bonds, etc.) have lost massive flows of around$27.8 billion. Equity funds, though, continue to see net inflows. 

Earnings will continue this week as well, after the intense beating of banking stocks. Main reports of the week ahead are United Airlines Holdings, Coca-Cola and IBM on Monday, Procter & Gamble and Philip Morris Intl on Tuesday, Baker Hughes, Halliburton and Verizon Communications on Wednesday, Snap, Intel, AT&T, and American Airlines Group on Thursday and Honeywell International on Friday. 

PBoC, RBA, ECB, and BoC meetings!

After strong beats across stocks earning reports, we have central banks in the spotlight as PBoC, RBA, ECB, and BoC will hold interest rate decisions and monetary policy meetings in the week ahead. 

Tuesday, we expect the People’s Bank of China (PBoC) to maintain flexibility in the F.X. exchange rates and steady market expectations to support the Yuan in the F.X. market to be stable at reasonable levels. RBA also will hold its meeting at the same time with PBoC; after that governor, Lowe in the last forum told that “the exchange rate has appreciated and is in the upper range of the recent year,” we are expecting some surprise from this meeting to push the Aussie a bit lower, as currently, it is not the favor of central bank and country generally to have such a high rate to increase the exports. 

Wednesday and BoC. We expect to hold the 0.25% rate level but reduce its government of Canada (GoC) bond purchases from $4 billion per week to $3 billion per week, discontinuing some emergency liquidity programs. As what we are expecting from other central banks, some surprise from BoC also are expecting, like potential adjustments to its monetary policy path or even start signaling it. 

ECB on Thursday will hold its Interest Rate Decision, Statement, and Conference call. In past weeks and after that, worries about higher inflation used be highlighted, Officials have been emphasized that ECB will continue to provide monetary support for as long as necessary. ECB also extended the pandemic emergency purchase program (PEPP). This week must be an exciting meeting, especially after a previous boring meeting, with no specific policy decision. 

Economic Calendar

Monday sees minor economic releases due with only three and 6-month bill auctions. Also, Japanese Trade data and Canadian Housing numbers must be watched closely. 

Tuesday, we are always waiting for weekly crude oil stock numbers from API while expecting that U.S. stockpiles fall sharply. U.K. employment data and German PPI also are other primary data of the day. 

Wednesday will be the CPI day, like New Zealand, U.K., South Africa, and Canada will be published their data. Also, Wednesday, we are waiting for a 20-year bond auction which may reduce the inflation rise.

Thursday has the usual jobless claims number as well as U.S. Housing data for March.

And finally, Friday is PMI data day, since U.K., Germany, EZ, and United States will be publishing their data, while the week will be ending by U.S. Baker Hughes Oil Rig Count numbers. 

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