As the war in Ukraine enters its seventh week, market attention remains on the situation on the ground and peace talks. Meanwhile traders will be eyeing the Reserve Bank of Australia’s commentary around when it could pull the trigger with a rate hike, whilst minutes from the last FOMC meeting will be parsed for clues about how close policymakers are to hiking rates by 50bps and how worried they are about a wage price spiral. 

RBA 

The Reserve Bank of Australia meets on Tuesday for its latest policy decision.  An interest-rate rise this year is “plausible,” Reserve Bank Governor Philip Lowe said at the beginning or March. But the RBA has certainly not nailed its colours to the mast for hikes like the Federal Reserve. In February the Australia central bank ended its bond buying programme, citing an improved economic outlook, unemployment at a 13-year low of 4.2%, and higher inflation. Markets have started to price in some modest tightening this year. 

FOMC minutes 

Minutes from the last Federal Reserve meeting are due on Wednesday. These will provide greater insight into policymakers’ thinking after the US central bank raised rates for the first time since 2018. The Fed’s new median dot plot calls for 7 hikes this year to 1.9%, with members pencilling in 2.8% further out, which would take the fed funds rate above neutral.  Since that call, we’ve heard from a range of policymakers suggesting that it could go faster than the dot plot implied. Markets have priced in back-to-back 50bps hikes. Last week the 2s10s curve inverted, raising recession fears. 

ISM  

On Tuesday, the big data release will be the US ISM services survey. Last month’s report showed economic activity in the services sector grew in February for the 21st month in a row. However, it also pointed to broadening price pressures beyond simply demand for goods.  

China data 

There is a Chinese bank holiday on Monday, but later in the week market participants will look to the Caixin services PMI and China trade data. Recent lockdowns in Shanghai and elsewhere has already got the market worried about Chinese growth prospects, but the data won’t show this up yet. 

Ukraine  

Attention will naturally fall on Ukraine and its war with Russia, and any progress with peace talks. Commodity prices are likely to remain volatile and we should note that as we enter April the market will start to lose even more Russian barrels. Only now, over a month into the war, are we beginning to see strong signs that Russian well-head production is declining, as exports, especially of refined products, drop. 

Major economic data