Last Week’s Highlights
China’s Manufacturing Activity Rebounds
In what seems like a scenario that’s too good to be true, China’s manufacturing activity for March rolled back into expansion territory. This comes right after the data for February saw manufacturing activity falling to 35.7.
For March, the manufacturing activity rose to 52.0. It was a similar story in the non-manufacturing sector as well. Activity in the services sector jumped from all-time lows of 29.6 in February to 52.3 in March.
Eurozone flash inflation estimates weaker
The flash estimates on consumer prices for the eurozone saw a drop in the index. The data measured by Eurostat saw headline inflation rising at a slower pace of 0.7% for March. This was slower than the 1.2% increase in February.
The core inflation rate fell to a slower pace of increase at 1.0%, down from 1.2% previously. The declines come due to various factors including weaker oil prices and global demand.
US Manufacturing Holds Up, for Now
The manufacturing activity in the US as measured by ISM saw a fairly better than expected performance for March. ISM manufacturing PMI for March fell to 49.1. This was down from 50.1 in February, but the reading was better than the forecasts. However, investors are biding time as there is a strong chance for activity to decline even further in the coming months.
US Jobs Paint Grim Picture
The latest payrolls report from the US was disappointing in one way, but still in line with the expectations given the current economic conditions. Payrolls fell 701,000 in March, which was bigger than the general consensus of a 100,000 decline.
The unemployment rate jumped from decade lows of 3.5% to 4.4%. However, wage growth rose dramatically from 0.3% to 0.4% during the same period.
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Upcoming Economic Events
OPEC and Russia to Discuss Oil Cuts?
After last week’s statement from President Trump about mediating between Saudi Arabia and Russia, OPEC and Russia are preparing for an emergency meeting this week.
There are rumors that OPEC+ will consider production cuts, anywhere from 6 million BPD to 10 million BPD. Oil prices are already rising since last week’s comment from the US President after falling to a 35-year low just in the weeks before.
RBA to Assess Monetary Policy, but no Changes Likely
The Reserve Bank of Australia will be holding its monetary policy meeting on Tuesday. After lowering interest rates twice in March already, we do not expect further changes.
Thus, interest rates will remain at 0.25% at this week’s meeting. The central bank is likely to maintain its support to the economy by noting that it will be ready to do more if needed.
ECB Meeting Minutes on the Docket
The European Central Bank will be releasing its meeting minutes on its monetary policy meeting from early March. The central bank left interest rates unchanged but announced a slew of measures to tackle the pandemic.
The minutes could show whether members of the governing council are also contemplating taking rates even lower. It could potentially highlight the concerns of the governing body. However, the market impact is likely to be limited.
Canada Jobs Report Likely to Get Ugly
Following the US jobs report last week, focus this week turns to the Canadian jobs market. Although the forecasts are tame, investors will brace for an ugly reading.
There is a strong chance the jobs data could break all-time lows in job losses. Most importantly, the report could come out even worse than that of the United States.
Canada’s jobless claims rose sharply when PM Trudeau said that Canada’s Employment Insurance claims surged 929,000 between March 16th through 22nd.
