Written Commentary
- Ukraine war continues to cast very dark shadow: Services PMIs dominate schedule as RBA and Riksbank’s hawkish turns, SE Asia inflation, Japan Wages and Spending are digested; US and Canada trade ahead; Fed’s Brainard speech in the spotlight, Romania’s BNR expected to hike rates
- Service PMIs: seen expanding, but downside risk in Eurozone
- German Ifo Auto sector survey suggests recession risk looms large
EVENTS PREVIEW
The war in the Ukraine continues to eclipse pretty much anything other than China’s efforts to contain the spread to the Omicron variant. The day’s data schedule has Services PMIs/ISM as its highlight, while Fed’s Brainard speech on the unequal impacts of inflation tops the run of events. Statistically there are also Japan’s Household Spending and Labor Cash Earnings, Philippines and Thai CPI, and French Industrial Production to digest, with only US and Canada Trade. But the latest German Ifo Auto sector survey is perhaps the most interesting item of the day so far, with the expectations index collapsing to -43.1 vs. February’s +14.4, which given the sizable contribution of the sector and its very long and extensive supply chain suggests that Germany is already moving into recession territory. On the central bank front, the RBA left rates unchanged at 0.1% as anticipated, but signalled a hawkish guidance shift by dropping its reference to being patient, as was to be expected. Sweden’s Riksbank is also set for a more hawkish turn, as signalled this morning by deputy governor Floden, saying that policy will need to be re-evaluated at the next meeting. Romania’s BNR is expected to hike rates 50 bps to 3.0%, though as is the case with Poland’s NBP (policy meeting tomorrow), it is way behind the curve, on inflation above all relative to both Czechia and Hungary.
** World – March Services PMIs/ISM **
– These are expected as ever to see no changes from flash
readings in terms of the G7, though the risk of downward revisions in the
Eurozone and perhaps UK looks to be substantial. The US Services ISM is
expected to rebound to 58.5 after an expectedly sharp dip in February to a
12-mth low of 56.5, per se mirroring the unexpected jump in the PMI. The risks
would appear to be on the upside of the consensus, above all given the strength
of Leisure/Hospitality within the Payrolls report, and a sharp pick-up in small
business hiring in the ADP breakdown.
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