By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week starting April 20.
U.S. retail sales data and provisional purchasing managers' indexes from the U.S. and Europe will be watched to see how badly the Middle East war and the spike in energy prices have impacted consumer and business sentiment.
Focus, however, will remain on developments in the Middle East after Iran's foreign minister said on Friday that the Strait of Hormuz was "completely open" to commercial vessels, causing a steep fall in oil prices while expectations for interest-rate hikes dropped. Investors will be watching to see whether the strait remains open.
Inflation data for March from the U.K., Japan and New Zealand will give a key gauge of how higher oil and gas prices have fed through into broader consumer prices.
U.S.
U.S. retail sales data for March due on Tuesday are likely to be the highlight among U.S. economic data releases.
These will give evidence of the extent to which the spike in energy prices caused by the Middle East war has hit consumer spending, which was already looking weak ahead of the conflict.
ING economist James Knightley said focus will center on core retail sales, which strips out autos, gasoline, building materials and eating out and better reflects broader spending trends. A gain in this measure of 0.2% on month would fail to keep pace with inflation and "mean a third consecutive month of weakness in consumer demand in an environment of depressed sentiment and squeezed spending power," he said.
Weak U.S. economic data could add to prospects of the Federal Reserve cutting interest rates, especially if oil prices continue to fall. U.S. money markets on Friday priced in a 63% change of a Fed rate cut by year-end, LSEG data showed.
U.S. provisional purchasing managers' surveys for April, due Thursday, will give a more up-to-date indication of how the Middle East war uncertainty and energy-price increases have impacted activity in manufacturing and services. Weekly jobless claims data are also due Thursday, followed by the University of Michigan's final consumer sentiment survey for April on Friday.
Another event of interest will be Kevin Warsh's confirmation hearing to become Federal Reserve Chair, which is due April 21.
Warsh will very likely be questioned on how closely aligned he is with the views of President Trump, who has said he favors lower interest rates, ING's Knightley said.
The Treasury will auction $13 billion in 20-year bonds on Wednesday and $26 billion in five-year inflation-protected TIPS on Thursday.
Canada
Canadian inflation data for March are due Monday and are expected to show the impact of the spike in energy prices caused by the Middle East conflict.
TD Securities expects Canadian annual CPI to accelerate to 2.5% in March, following a sub-2% reading in the prior month, fueled by higher gasoline prices.
However, there shouldn't be a big spillover from higher energy prices to core CPI and as such it is unlikely to trigger a change in the Bank of Canada's messaging, TD Securities strategist Robert Both said.
Eurozone
Flash estimate purchasing managers' data for April for France, Germany and the eurozone will be the most important indicators. They will potentially provide fresh insight into how businesses see the economic outlook for the coming months in light of high energy prices.
Prior to that, the German ZEW economic sentiment is due on Tuesday and the Ifo business climate index on Friday, both for April.
The PMI data "will offer a useful measure of how activity is being affected by the crisis in the Middle East," said Oxford Economics' chief European economist Angel Talavera in a note.
"We expect PMI data to show a decline in activity, with the composite index falling to the 50-point threshold," he said. "We expect activity in Germany to remain slightly stronger than in France, albeit not by a large margin. The PMI data will also offer useful insights regarding business expectations for prices, which the European Central Bank will closely monitor."
Government bond supply will be low, with Slovakia lining up for an auction on Monday, Finland on Tuesday and Italy on Friday. Germany will launch the new June 2028 Schatz on Tuesday with 6 billion euros on offer and it will auction a combined 2 billion euros in May 2041- and May 2047-dated Bunds on Wednesday.
U.K.
U.K. March inflation figures on Wednesday will be the highlight of a busy week for U.K. economic data.
These will show how much the recent surge of energy prices has fed through into higher prices. Annual CPI inflation is expected to rise from February's rate of 3.0%. HSBC and Investec both forecast a reading of 3.2%.
This will be the last set of inflation figures that the Bank of England will see ahead of its next decision due on April 30.
U.K. money markets on Friday priced in around one 25 basis-point rate increase from the BOE by year-end, LSEG data show.
Jobs and wages data for February will be released on Tuesday and will be of some interest, even though they refer to the period just before the start of the Iran war.
Investec forecasts annual wage growth including bonuses to fall to 3.5%. This would take the rate closer to the 3.25% pace that the BOE considers consistent with its 2% inflation target for the long term, its economists said.
Producer-price inflation for March is also released on Wednesday, followed on Thursday by provisional purchasing managers' indexes for April on manufacturing and services activity.
"We imagine the [PMI] report for April will show a further decline, especially as the conflict has now lasted longer [than expected]," Investec economist Ellie Henderson wrote.
U.K. public finances data for March are released on Thursday. March retail sales data and the GfK consumer confidence survey for April are announced on Friday.
The U.K. will sell government bonds maturing in May 2029 on Tuesday. The Debt Management Office will publish the revised gilt remit for the fiscal year ending in April 2027 on Thursday.
Scandinavia
Denmark and Sweden will hold government bond auctions on Wednesday.
Turkey
Turkey's central bank announces an interest-rate decision on Wednesday.
ING's Muhammet Mercan said the central bank will likely leave rates on hold, keeping the one-week repo rate at 37%, although in February it reiterated its commitment to tightening monetary conditions in the event of a marked deterioration in the inflation outlook.
Japan
Government data due Friday are expected to show Japan's consumer inflation excluding volatile fresh food rose 1.8% in March from a year earlier, according to Quick poll, up from a 1.6% in February. The impact of Middle East tensions is likely limited for now, as gasoline subsidies cushion costs for households.
Barclays economists pointed to markets having priced in a lower possibility of a rate increase by the Bank of Japan--hence, any CPI implications for the April meeting are likely to be limited, they said.
The focus is on how the central bank assesses the longer-term impact of Middle East developments on the real economy and how that ties to the timing of the next hike, the economists said.
Japan will also release March trade data on Wednesday, while the BOJ publishes its semiannual Financial System Report Tuesday. The central bank is scheduled to conduct outright purchases across several sectors of Japan's government bond market, including 1-3 year, 10-25 year and inflation-linked bonds.
The Ministry of Finance will also hold a liquidity enhancement auction of about 250 billion yen in 20-, 30- and 40-year JGBs Tuesday.
New Zealand
The week in New Zealand will focus almost entirely on first-quarter inflation data due Tuesday. Economists expect the headline consumer price index to rise about 2.9% on year, in line with the Reserve Bank of New Zealand's forecast.
Gasoline prices rose nearly 19% in March, though the quarterly impact will be smaller.
A stronger-than-expected reading could prompt markets to price in a May rate increase.
China
On Monday, the People's Bank of China is scheduled to announce its latest loan prime rates, the benchmarks for household and corporate lending. Markets widely expect the one-year and five-year rates to remain unchanged at 3% and 3.5%, respectively.
ANZ Research's Raymond Yeung said holding rates steady reflects a preference to manage conditions through structural tools rather than broad rate cuts, especially while growth remains broadly on target.
He added that the energy shock from the Iran conflict is likely to push up inflation across Asia given reliance on Middle Eastern fossil-fuel imports. While monetary policy isn't typically the first line of defense against a supply shock, Asian central banks, including the People's Bank of China, may still lean toward tightening if oil prices stay higher for longer, ANZ said.
South Korea
The Bank of Korea is set to release first-quarter gross domestic product data Thursday, with most analysts expecting a rebound after a contraction in the previous quarter.
Stronger exports, along with a recovery in private consumption and facility investment, likely drove growth of 1.2% on quarter and 3.0% on year in the January-March period, Barclays economist Bumki Son said.
The impact of Middle East tensions isn't yet reflected in the data but could weigh on petrochemicals and other sectors from the second quarter, Son said.
Indonesia
Indonesia's central bank is widely expected to hold rates steady at 4.75% on Wednesday, with Goldman Sachs economists expecting policy settings to remain unchanged throughout this year and next.
Bank Indonesia's dual mandate for maintaining inflation stability while supporting the currency "appears increasingly challenged by spillovers from the Middle East conflict," GS economist Chris Poh said. Subsidized petrol prices overall have largely insulated the economy from higher global energy costs.
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04-19-26 1714ET
