Welcome to "The Long & Short of the Week Ahead", a production of Eurizon SLJ Capital that takes a look at the macro-economic themes of the week ahead and has been recorded for professional investors.
My name is Matt Jones, Head of Distribution for Eurizon SLJ Capital, and I'm joined by Neil Staines, Senior Portfolio Manager.
Welcome back, Neil. It's great to have you here with us again.
Thank you very much Matt. It's great to be here.
So, we have perhaps a lighter week ahead when it comes to data. As the last couple of weeks have shown us, perhaps it's not gonna be very light on the volatility side but definitely feels like a time for reflection. Perhaps you can guide us through the week ahead.
Yes, absolutely. Thanks Matt. It's been another volatile week in financial markets with rate hikes from the Fed and the Bank of England. But a more cautious narrative combined with weaker market sentiment related to banking concerns, that ultimately saw lower yield curve and rising rate cut expectations. Next week contains relatively few tier one data prints and even less so from the US. And this likely leave some time for markets to reflect, as you say, on recent macro developments and for central banks to further evaluate their policy stance and/or activism not just to inflation, but also to bank liquidity and the impact on credit creation in the real economy. However, there are a few events that we look out for next week.
Firstly, we focus on the Eurozone as market sensitivity to Eurozone Bank shares. The release of the German IFO survey for March, will give an important update on business sentiment after both the more positive starts of the year and a close for 2022 than expected and significant recent rate hikes potentially an important gauge of sentiment against a tougher credit landscape ahead. On Friday we also get the Eurozone CPI print from March, where headline inflation is expected to slow sharply from 8.5% down to 7.2%, but the core inflation is expected to edge a touch higher. As Eurozone growth slows and headline inflation moderates the higher core inflation print likely continues to cause the ECB a policy headache, especially if bank liquidity concerns remain. We also keep a close eye out for ECB speakers next week in that regard.
Then secondly, in the UK there is also a relative hiatus on the data front. But we start the week with commentary from Bank of England, Governor Bailey. Now, last week, the bank hiked rates by 25 basis points, but the message from the monetary policy reports was far more cautious. The acknowledgement that wages have started to weaken sequentially the downplaying of the recent inflation jump, and most significantly, the fact that the minutes no longer note that inflation risks are significantly skewed to the top side all way on the monetary policy committee reaction function and for us imply that the Bank of England is done. As we outline a little further in this week's blog. Commentary from Katherine Mann, arguably the arch-hawk on the MPC on Wednesday will be interesting in this regard. So much to pay attention to for in the UK.
Then lastly, focus will , undoubtedly be back to the US next week. Fed and increasingly treasury officials and their narrative on bank liquidity and the urgency of requisite measures and all facilities, will continue to dominate the market sentiment. The key market barometers being bank stock indices and US rate curves. A commentary from Fed's Barking and William's will be of note later in the week as will the PCE data on Friday. But in all reality, sentiment is likely to be the dominant force and the continued repricing of the US yield curve. So look out for impromptu comments from Powell and or Yellen as the week gets underway.
Thank you, Neil. Still plenty to be looking out for in the week ahead. In the meantime, it's the weekend and potentially a slightly quieter one as well there.
Yeah, absolutely. Thanks Matt. It's a time of reflection in the sporting world also. Can the England Rugby and Wales Rugby learn from Six Nation errors? Can team Red Bull be caught this year, or is the title already decided after just two races? Will West Ham win the Europa Conference League and get relegated from the premiership? All questions that we can ponder this weekend. In the meantime, we get to sit back and enjoy some international football England face Ukraine after beating Italy in the week. Northern Ireland, Finland after beating San Marino. Scotland plays Cyprus in Spain. Wales play Croatia and Latvia and the Republic of Ireland host France. So tough games for them, and against that backdrop we can sit back and enjoy Match Play golf at the World Match Play tournament from Texas.
Thank you, Neil. Slightly a lighter pace in comparison to the last few weekends, but still very enjoyable, no doubt. Thank you once again for joining us and for outlining your thoughts on the week ahead. I look forward to catching up with you again next week.
Thank you for joining us for "The Long and Short of the Week Ahead". Further insights are available on our website eurizonsljcapital.com/insights. We look forward to you joining us again next week for more insights into macro-economic events and "The Long and Short of the Week Ahead".
This communication is issued by Eurizon SLJ Capital Limited (“ESLJ”), a private limited company registered in England (company number: 09775525) having its registered office at 90 Queen Street, London EC4N 1SA, United Kingdom. ESLJ is authorised and regulated by the Financial Conduct Authority (FRN: 736926). This communication is treated as a marketing communication intended for professional investors only and is provided only for information purposes. It has not been prepared in accordance with legal and regulatory requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. It does not constitute research on investment matters and should not be construed as containing any recommendation, advice or suggestion, implicit or explicit, with respect to any investment strategy or financial instruments, or the issuers of any financial instruments, or a solicitation, offer or financial promotion relating to any securities or investments. ESLJ and its affiliates do not assume any liability whatsoever for the contents of this communication, save to the extent agreed in any written contract entered into between ESLJ and the recipient, and do not make any representation or warranty as to the accuracy or completeness of any information contained in this communication. Views are accurate as at the time of publication. Opinions expressed by individuals are their own and do not necessarily reflect those of ESLJ or any of its affiliates. The value of any investment may change and an investor may not get back the original amount invested. Past performance is not an indicator of future performance. This communication may not be reproduced, redistributed or copied in whole or in part for any purpose. It may not be distributed in any jurisdiction where its distribution may be restricted by law and persons into whose possession this communication comes should inform themselves about, and observe, any such restrictions.
Subscribe to our insights
If you are interested in our content, please sign up below and we will deliver Eurizon SLJ insights right to your inbox.
I consent to my data being collected and stored for the purposes of providing me information regarding my enquiry and related services. If you have any questions about your data please contact us at email@example.com
Our written research products aim to provide unique and orthogonal insights on key global economic and policy issues in a timely fashion.