Firstly, we take a close look at the data prints, the US ISM data for April comes in two parts next week, manufacturing on Monday, and services on Wednesday. PMI equivalence with variable correlations showed a bounce in activity, so markets will be closely watching for corroboration or otherwise. In Europe, we get the April Flash CPI data, possibly tipping the balance for the ECB between 25 or 50 basis points at they're meeting next week. A slight bounce in some of the member states inflation prints this week, so maybe erring towards the top side. Perhaps the biggest data focus of the week, however, will be on Friday's non-farm payroll print. Expectations offer 170,000 headline payroll gain with the unemployment rate ticking up to 3.6% and average hourly earnings unchanged at 4.2%. Plenty to keep us entertained amid plenty of developed markets, Central Bank focus next week.

Secondly, we focus on that central bank action and developed markets. The RBA on Tuesday are expected to leave rates unchanged at 3.6% as signs that tight monetary policy is beginning to damp consumption, and that inflation has peaked after some significant volatility around the turn of the year. And the RBA are certainly more attuned to the lagged effects of previous cumulative rate hikes. More significantly and with a greater degree of uncertainty, the ECB looks set to hike rates for an eighth consecutive meeting as core inflation shows no clear signs of peaking unless Tuesday's print surprises that is. The question remains, however, what is the appropriate policy increment? Is it 25 or is it 50? Markets are split with current pricing in around 30 basis points. The case may be decided by the governing council discussions about the appropriate pace of QT going forward. A 50 basis point move may be accompanied by a QT remaining at the 15 billion euros per month already decided 25 basis points may elicit a bigger quantitative tightening. Terminal rate pricing in Europe is close to 4%, so even if we get a 50, it's unlikely the ECB signal and end June, July, and even September still remaining live. The ECB will be very closely watched.

Then finally, the big focus of the week, however, will likely be the FOMC meeting on Wednesday. Markets are pricing around 22 basis points, and there is little doubt about the active Fed policy increment. As we discuss in this week's blog, the case for any further rate hikes is not clear to us as supply and demand show closer balance in goods and in labor markets. But it seems unlikely that the Fed will disappoint such clear market expectations at this late stage. We maintain the core macro view that inflation will drop significantly through the rest of 2023 economy with a falling aggregate demand. In many ways, the press conference will be more important as we feel the current level of uncertainty around the bank credit suggested the Fed could or should, in our view, refrain from signaling any further rate hikes. The significance of the Fed effectively announcing they are done should not be underestimated and it is relevant for all asset classes, and on that basis, Wednesday's Fed really is essential viewing.