African Reserves Loans

Week ahead: an encouraging recovery

Are investors right to be optimistic?

Investors seem remarkably calm at the moment given the level of uncertainty we face this year, from to and even COVID, as you consider China still embracing lockdowns.

Throw yourself into the mix and there are plenty of reasons to be pessimistic. But when you look at the financial markets, that’s not what we see. Stocks are not far off from record highs in many cases and the has yet to reverse in a way that suggests a recession is coming.

Instead, the Fed is warning of a very aggressive tightening cycle, telling us that the labor market is too strong and inflation will be back under control soon enough. For once, the central bank and the markets appear on the same page. Which probably makes me feel more uncomfortable than it should.


The focus on Wall Street remains on geopolitics, but many traders will pay close attention to economic readings on the US jobs market, consumption, inflation and manufacturing activity. The Fed is confident the economy is on solid footing despite soaring inflation, but if the economic data tells a different story, that could change the priority approach to oversized rate hikes.

The report will confirm that the labor market remains strong. The consensus estimate for jobs created in March is 450,000, which would be down from February’s gain of 678,000. The index is expected to fall to 3.7%, while it could rebound to 0.4%, an improvement from the flat reading seen a month ago.


It goes without saying that next week the focus will continue to be on what is happening in Eastern Europe and what the EU is doing to reduce its dependence on Russian energy and enable it to impose more severe penalties. The latter is unlikely anytime soon, but the US LNG deal was a step in that direction.

Next week offers an abundance of economic data, the most notable being the flash inflation indicators. Friday’s Eurozone flash will be the one to watch, but we could get individual nation indices earlier in the week.

Central banks have been forced to backtrack on their transitional message in recent months and the ECB took a step in that direction a few weeks ago. Further unexpected spikes in inflation will further increase the pressure and make the comments of President Lagarde and her colleagues all the more interesting.


Mainly Level Two and Three data from the UK next week, with a BoE Governor’s speech on Monday the highlight. The MPC last week looked like it was easing its hawkish stance slightly after three straight hikes, but last month accelerated faster than expected, which could force it to stick to a few more meetings. The Deputy Governor also speaks on Wednesday.


Against the backdrop of Russia’s illegal invasion of Ukraine, Western imposed sanctions and attempted Kremlin counterattacks – for example, last week’s decision to insist that Russian gas purchases be made in Ukraine – there is going to be little hype about the data and next week.

Negotiations are continuing with Ukraine but seem to be making little progress. Meanwhile, sanctions continue to be imposed and the EU is slowly severing energy ties, which will be detrimental in the long run. In the near future, the economy is expected to fall into a two-year recession, with this year’s contraction being particularly sharp, up to 10%.

South Africa

The SARB rose 25 basis points last week, but two (out of five) members of the MPC voted for a 50 basis point hike. The tightening cycle is expected to continue with it operating at the upper end of its 3-6% target range and mounting commodity pressures.


A relatively quiet week is shaping up for Turkey, with the only notable exit.


A myriad of forces will impact Chinese markets over the coming week. Evergrande (HK:) is making headlines again with foreign bondholders running out of patience. COVID-19 continues to spread across the continent, increasing the threat of lockdowns affecting manufacturing and logistics. US authorities are less supportive of audits of US-listed Chinese companies than noise from China. Russian support, tacit or official, is a huge point of risk from a sanctions perspective.

China also releases its official and services PMIs.

All of this poses a downside risk to Chinese stocks which quickly lost momentum after the government rushed to support the market last week. China left unchanged, disappointing participants who wanted to see concrete action.


India publishes its Friday, which could show the impact of a price increase. As a huge net importer of energy and with the central bank’s continued reluctance to raise interest rates, the rest remains close to the low end of its range. A sharp rise in oil prices, or next week, could trigger further weakness in INR, which could also see speculative money exit the .


The is close to recent highs thanks to the fresh surge in commodity prices and potentially some inflows into safe havens, although risk sentiment remains better than the previous week. the data was strong and the week ahead features , and . and local equities will also be sensitive to impressions from the Chinese PMI.

There is plenty of good news priced into the AUD at these levels, also helped by buying. Weak data, a strong swing in sentiment or weak Chinese PMIs could lead to a sharp downward correction in the AUD, which could also be reflected in equity markets.

New Zealand

The rallied strongly on commodity prices and haven entries as markets brace for a faster RBNZ tightening. There is a lot of good news priced in like AUD/USD, and that leaves the NZD vulnerable to a sharp downside correction.

Tuesday could provide that excuse if confidence plummets due to war and Ukraine’s surge.


rose 400 points last week as the spread between the United States and Japan exploded. The BoJ and MoF have tried to dissuade them with limited success. FX markets should now be on alert for more “watching FX” comments, which could send USD/JPY sharply lower intraday over the next few weeks.

Japan has a heavy data schedule with , , and arguably the most important and the . The latter two will provide insight into the impact of the disruption and wave in Ukraine on business. Low print runs could be a headwind for local equities.


rose this week, setting up a MAS tightening in April. Local markets were buoyant, however, as COVID restrictions were eased significantly. The PPI presents an upside risk this week, which could increase the noise of the MAS and dampen stocks. just keep running with the USD/Asia pack, which is moving entirely on swings in Ukrainian sentiment at the moment.

Economic calendar

Sunday March 27

Economic data/events

Chinese industrial profits

Monday, March 28 th

Economic data/events

  • US wholesale inventory
  • President Biden to unveil his 2023 budget request
  • Unemployment in South Africa
  • Trade from Mexico
  • Norway Norges Bank Deputy Governor Borsum addresses the bank’s regional network
  • UK Chancellor Sunak appears before the Treasury Committee to discuss his spring statement
  • BOE Gov Bailey speaks on the economy at an event organized by European think tank Bruegel

Tuesday 29 March

Economic data/events

  • US consumer confidence
  • Australian Treasurer Frydenberg presents annual budget
  • Philadelphia Fed Chairman Harker discusses the economic outlook at an event hosted by the Center for Financial Stability in New York
  • Bank of England Quarterly Bulletin
  • Unemployment in Japan
  • Australian retail sales, consumer confidence
  • Mexico’s international reserves

Wednesday March 30

Economic data/events

  • Final GDP of the United States in the fourth quarter
  • CPI Germany
  • Fed’s Barkin speaks at a conference on investing in rural America hosted by his bank
  • BOE Deputy Governor Broadbent speaks at ‘The MPC at 25’ conference
  • British Prime Minister Johnson appears before the Liaison Committee
  • Unemployment in Russia
  • Unemployment in Mexico
  • New Zealand building permits, business confidence
  • Thailand Rate Decision: Expected to Keep Benchmark Interest Rate Unchanged at 0.50%
  • Retail sales in Japan
  • Eurozone economic confidence, consumer confidence
  • EIA Crude Oil Inventory Report

Thursday, March 31st

Economic data/events

  • U.S. Consumer Income, Initial Unemployment Insurance Claims
  • OPEC and non-OPEC ministerial meeting on production
  • SNB’s Maechler and Moser speak at a money market protest in Zurich
  • The Fed’s Williams makes a keynote speech at a conference
  • Bank of Italy Governor Visco delivers annual speech on the state of the economy
  • CPI France and Italy
  • UK GDP
  • Czech Republic GDP
  • Industrial production in Japan
  • South African trade balance
  • Euro zone and German unemployment:
  • China manufacturing PMI, non-manufacturing PMI
  • Jobs in Australia, building permits
  • India Fiscal Deficit, Eight Infrastructure Industries, BoP
  • Thailand BoP
  • Housing starts in Japan
  • Singapore Money Supply

Friday April 1

Economic data/events

  • March U.S. nonfarm payrolls change: 450,000 vs. 678,000 previously, construction spending, unemployment, ISM manufacturing, vehicle sales
  • Virtual Europe-EU Summit with Chinese President Xi and Prime Minister Li Keqiang as well as President of the European Council Michel and President of the European Commission von der Leyen
  • Eurozone manufacturing PMI, CPI
  • Eurozone ECB’s Schnabel and Knot speak at an event in Cernobbio, Italy
  • CPI Poland
  • German manufacturing PMI
  • UK manufacturing PMI
  • New Zealand property prices, consumer confidence
  • Japan vehicle sales, PMI
  • Singapore Property Prices
  • Value of mortgages in Australia, house prices
  • China Caixin PMI
  • Thailand PMI, foreign exchange reserves, business climate index

Sovereign Ratings Updates

  • Poland (S&P)
  • Turkey (S&P)
  • Italy (Moody’s)
  • South Africa (Moody’s)
  • France (DBRS)

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