The fallout from the first round of voting in France’s Presidential election will be at the forefront for European markets on Monday. Whilst Macron is expected to win in a run-off in two weeks’ time, polling showed Le Pen close on his heels going into Sunday’s vote. Meanwhile traders will be looking to a European Central Bank decision, US inflation data and the start of earnings season on Wall Street. 

French Election 

As we head into the first round of the Presidential election, the French nation is heaving a collective Gallic shrug, writes Helen Thomas. Macron lost his neophyte Jupiterian sheen within months of storming to victory five years ago and that was before a pandemic, war, and a bout of nasty inflation burst onto the horizon. But none of his opponents has been able to sustain the unassailable momentum required to depose Emmanuel from his throne. France appears to be voting for “None of the above”. With turnout expected to be low, the first round is likely to increase uncertainty over the outcome of the decisive second round two weeks’ later. We are about to enter a period of increased risk premium for French assets. Read Helen’s full preview. 

ECB  

The European Central Bank meets amid an open debate about policy among hawks and doves. Governing Council member Panetta said action now to bring down high inflation could crash economy, and that action now to bring down high inflation in near term would be “extremely costly”. Certainly, the ECB is dealing with a different kind of inflation than the US; i.e. much more a supply shock and little of the demand-led recovery we see in the US. But there are growing concerns the ECB is losing credibility. ECB policymaker Wunsch said “based on the current outlook…we will raise interest rates to 0 by the end of the year”. The meeting comes after inflation in the Eurozone rose to 7.5%. Money markets indicate the ECB might raise rates four times this year. We get to learn whether the hawks or doves are in the ascendancy on Thursday. 

US Inflation 

Consumer inflation data is the big one for Tuesday. Last time, US CPI rose to 7.9% and it has not peaked yet. But given the hawkish noises from leading Fed members another 40-year high print would be unduly unsettling as it’s largely expected. 

Earnings Season 

US earnings season begins in earnest this week with JPMorgan Chase the first of the major banks to get the balling rolling.  

Amid increased geopolitical uncertainty and rising inflation pressures, this season’s reporting may reflect a lot more pessimism than was evident three months ago. Moreover, whilst markets entered Q1 pricing in at most 3 rate hikes in 2022, fed funds futures signal the market expects 8 hikes of 25bps this year. Among the most obvious changes over the quarter was the Russian invasion of Ukraine, which has upended assumptions about the future path of global growth, whilst heaping more inflation fuel on the fire. Read our Q1 2022 earnings season preview. 

Bank of Canada & RBNZ 

On the central bank front, there are decisions from the Bank of Canada and the Reserve Bank of New Zealand, both on Wednesday. The BOC is widely expected to raise rates by 50bps, with all six of Canada’s major commercial banks pencilling in the outsize hike. Meanwhile the RBNZ is expected to raise rates by 25bps. 

China data 

Amid Covid outbreaks and lockdowns in major cities, a tightening supply chain and turbulent markets, this week’s Chinese data will be pored over for what it means for global growth, as well as local indices and currencies. Friday sees the release of the latest Chinese GDP, retail sales, fixed asset investment and industrial production figures. 

 

Major economic data 

Mon Apr 11	2:30am	CNH	CPI y/y
		CNH	PPI y/y
	7:00am	EUR	German WPI m/m
		GBP	Construction Output m/m
		GBP	GDP m/m
		GBP	Goods Trade Balance
		GBP	Index of Services 3m/3m
		GBP	Industrial Production m/m
		GBP	Manufacturing Production m/m
		JPY	Prelim Machine Tool Orders y/y
	11th-15th	CNH	M2 Money Supply y/y
	11th-15th	CNH	New Loans
	All Day	All	OPEC Meetings
	Tentative	GBP	NIESR GDP Estimate
	Tentative	NZD	NZIER Business Confidence
	11:45pm	NZD	Visitor Arrivals m/m
Tue Apr 12	12:01am	GBP	BRC Retail Sales Monitor y/y
	12:50am	JPY	Bank Lending y/y
		JPY	PPI y/y
	2:30am	AUD	NAB Business Confidence
	7:00am	EUR	German Final CPI m/m
		GBP	Average Earnings Index 3m/y
		GBP	Claimant Count Change
		GBP	Unemployment Rate
	7:45am	EUR	French Trade Balance
	10:00am	EUR	ZEW Economic Sentiment
		EUR	German ZEW Economic Sentiment
	11:00am	USD	NFIB Small Business Index
	Tentative	GBP	10-y Bond Auction
	1:30pm	USD	CPI m/m
		USD	Core CPI m/m
	Tentative	USD	IBD/TIPP Economic Optimism
	6:01pm	USD	10-y Bond Auction
	7:00pm	USD	Federal Budget Balance
	11:45pm	NZD	FPI m/m
Wed Apr 13	12:50am	JPY	Core Machinery Orders m/m
		JPY	M2 Money Stock y/y
	1:30am	AUD	Westpac Consumer Sentiment
	3:00am	NZD	Official Cash Rate
		NZD	RBNZ Rate Statement
	Tentative	CNH	Trade Balance
	Tentative	CNH	USD-Denominated Trade Balance
	7:00am	GBP	CPI y/y
		GBP	Core CPI y/y
		GBP	PPI Input m/m
		GBP	PPI Output m/m
		GBP	RPI y/y
	9:00am	EUR	Italian Industrial Production m/m
		EUR	Italian Trade Balance
	9:30am	GBP	HPI y/y
	10:00am	EUR	Industrial Production m/m
	Tentative	EUR	German 10-y Bond Auction
	1:30pm	USD	PPI m/m
		USD	Core PPI m/m
	3:00pm	CAD	BOC Monetary Policy Report
		CAD	BOC Rate Statement
		CAD	Overnight Rate
	3:30pm	USD	Crude Oil Inventories
	4:00pm	CAD	BOC Press Conference
	6:01pm	USD	30-y Bond Auction
	11:30pm	NZD	BusinessNZ Manufacturing Index
Thu Apr 14	12:01am	GBP	RICS House Price Balance
	2:00am	AUD	MI Inflation Expectations
	2:30am	AUD	Employment Change
		AUD	Unemployment Rate
	7:30am	CHF	PPI m/m
	8:00am	EUR	German Prelim GDP q/q
	Tentative	CNH	Foreign Direct Investment ytd/y
	9:30am	GBP	BOE Credit Conditions Survey
	All Day	EUR	Eurogroup Meetings
	12:45pm	EUR	Main Refinancing Rate
		EUR	Monetary Policy Statement
	1:30pm	CAD	Manufacturing Sales m/m
		CAD	Wholesale Sales m/m
		EUR	ECB Press Conference
		USD	Core Retail Sales m/m
		USD	Retail Sales m/m
		USD	Unemployment Claims
		USD	Import Prices m/m
	3:00pm	USD	Prelim UoM Consumer Sentiment
		USD	Business Inventories m/m
		USD	Prelim UoM Inflation Expectations
	3:30pm	USD	Natural Gas Storage
	All Day	NZD	Bank Holiday
	All Day	AUD	Bank Holiday
Fri Apr 15	3:00am	CNH	GDP q/y
		CNH	Retail Sales y/y
		CNH	Fixed Asset Investment ytd/y
		CNH	Industrial Production y/y
		CNH	NBS Press Conference
		CNH	Unemployment Rate
	5:30am	JPY	Revised Industrial Production m/m
		JPY	Tertiary Industry Activity m/m
	All Day	CHF	Bank Holiday
	7:45am	EUR	French Final CPI m/m
	All Day	GBP	Bank Holiday
	All Day	EUR	German Bank Holiday
	10:00am	EUR	Trade Balance
	1:30pm	USD	Empire State Manufacturing Index
	All Day	CAD	Bank Holiday
	2:15pm	USD	Capacity Utilization Rate
		USD	Industrial Production m/m
	9:00pm	USD	TIC Long-Term Purchases
	Tentative	USD	Treasury Currency Report