EUROPEAN SESSION
In the European session, the only highlight will be Spain’s CPI data, as it’s the first major Eurozone economy to release its March inflation figures. The forecast isn’t great as headline CPI is expected to jump to 3.9% Y/Y from 2.5% previously.
That said, a spike in March inflation is already widely expected. The key question for the ECB is whether to look through this temporary price shock or go ahead with an “insurance” rate hike at the April meeting. A lot may hinge on whether the US-Iran conflict is resolved by then.
Right now, markets are pricing in about a 74% chance of a rate hike in April, with a total of three rate hikes expected by year-end.
AMERICAN SESSION
In the American session, we have the final University of Michigan Consumer Sentiment report for March. The preliminary data wasn’t that bad, but that’s only because it came out early. The final report might see downward revisions to sentiment indicators and upward revisions for inflation expectations. Having said that, the data today is unlikely to matter much as the market will likely continue to hedge into the weekend risk.
Late yesterday, Trump extended the ceasefire through April 6, right as major equity indices were on the verge of breaking to new monthly lows and Treasury yields were pushing toward fresh highs. He claimed Iran requested the extension, though Iranian officials denied it. It looks like another attempt to jawbone the markets, but this time it didn’t have the same impact as earlier in the week.
At this point, traders are more inclined to hedge into the weekend risk than trusting Trump’s words.
CENTRAL BANK SPEAKERS
- 15:30 GMT/11:30 ET – Fed’s Daly (dovish – non voter)
- 15:40 GMT/11:40 ET – Fed’s Paulson (dovish – voter)
- 16:00 GMT/12:00 ET – ECB’s Schnabel (neutral – voter)
