of the week ahead

UK economic week in focus

This week's focus shifts to the UK, with significant economic reports on the horizon, from the employment report to the CPI print and retail sales data. All eyes will be on Governor Bailey's speeches for clues on the future of UK rates. Could we see warmer weather, cooler data and a move towards rate cuts in the UK?

Insights from the US market

This week, as the U.S. remains a dominant factor in the global rates arena, the focus shifts to retail sales data and Q1 earnings reports. The delicate balance between inflation, rates, and growth poses challenges, especially in the face of rising inflation pressures in certain sectors.

Global economic outlook

Beyond the UK and U.S., global markets are bracing for Q1 earnings releases and crucial data from China and Germany. The economic trajectory post-Chinese New Year, evidence of Germany's recovery and the updated IMF World Economic Outlook, will be keenly watched.


Matt Jones

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, 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.

Neil Staines

Thank you very much Matt. It's great to be here.

Matt Jones

So this week's been very U.S. and Eurozone focused, obviously with the CPI print and the ECB meeting. Next week brings a bigger UK focus. So what are you looking out for in the UK this week?

Neil Staines

Absolutely, thanks, Matt. Yeah, it's it's a huge week for the UK really, I think. We see the employment report for February/March on Tuesday, CPI print for March on Wednesday, and retail sales from March, again, on Friday. And we also get Governor Bailey speaking on both Tuesday and Wednesday.

So this brings a focus sharply back onto the path of UK rates. Currently we are pricing 53 basis points of UK rate cuts this year, and that is down from 71 basis points at the start of this week as markets have been dragged by the hawkish repricing we've seen in the U.S. as a function of the CPI print. Now we expect the data this week to question that repricing, and is it even possible that the UK could move without the Fed, starting sometime around the middle of this year.

Now headline inflation is expected to drop to 3.1%, in March, that's a 4.1% on the core measure. And we've heard from the MPCs Megan Greene this week that she expects inflation to hit target in May albeit very briefly. So that draws back into the consideration, inflation back at target if growth is continuing to slow or remain weak, as the data this week suggests, then we could be seeing warmer weather, cooler data and moves towards rate cuts in the UK.

Matt Jones

So as you say, the U.S. data and rhetoric is clearly dominant in global rates markets. So what should we look out for in the U.S. next week?

Neil Staines

Yeah. The U.S. still remains very dominant, particularly in the rates space. And following on from the disappointment in the CPI print or disappointing the high CPI print that we saw in the U S. this week. Next week we see the focus on the other side of the Fed's mandate, as we look at the retail sales for March. Now, as we expand further in this week's blog, at the moment, we have an odd dynamic where markets are trying to price higher inflation, higher rates and higher growth at the same time. Something that we think is very difficult to achieve in the longer run. Particularly when we see the pressure on the top side, on inflation, coming from factors, such as insurance and medical services, ultimately for us that reflects more of a tightening of consumer financing, and it's something that is not consistent with a continued expansion of growth and or rates, going forward.

Q1 earnings reports will start in earnest next week after a few releases in the banking sector at the back end of this week, and we also get a number of Fed speakers. Ultimately as we referenced, also in this week's blog, the ECB continue to focus on the element of confidence in the data in order to begin their rate cutting cycle. That element of confidence is also going to be very important in equity sentiment, following on from Q1 earnings. So that's going to be another focus for us next week.

Matt Jones

And what about the rest of the world? Are there any notable events in the wider global macro economic space for markets to focus on?

Neil Staines

There certainly are. Yeah, we get a, Q1 earnings are going to be mirrored across the rest of the world and that shifting global sentiment is going to be important for us to monitor. In China, we get the suite of data for for March that's industrial production, retail, sales, investment, and unemployment.

And alongside that, we get the Q1 GDP, and they will be very important, really for markets to gauge the post Chinese new year economic trajectory. We also get German ZEW out, again another important factor in the global economy is how Germany recovers from the recent stresses that its had, and it will be an integral part of the considerations in the updated IMF World Economic Outlook that we get next week as part of the spring meetings of the IMF and the World Bank. We are expecting the prospect of an upgraded global economic outlook, or global growth forecast, for this year and perhaps next year as Europe and China continue to rebound. So there'll be a number of sessions in a more global perspective. And a chance for us to reflect on a more international basis.

Matt Jones

Fantastic. Thank you for joining us once again and outlining your thoughts on the week ahead. I look forward to catching up with you again next week.


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 research@eurizonslj.com

    Envelopes on a wood background

    Our Research

    Our written research products aim to provide unique and orthogonal insights on key global economic and policy issues in a timely fashion.

    research page photo