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Attention this week is firmly on the Federal Reserve, which is widely expected to raise rates again. Also in action in a busy week for central banks are the Reserve Bank of Australia and the Bank of England. Meanwhile earnings season continues with names including Shopify, Airbnb and Peloton. 

Federal Reserve 

Over a week ago Fed chair Jay Powell stressed that taming inflation is “essential” and said a 50bps hike is on the table in May.  

Last month Lael Brainard, a Fed governor and vice-chair in-waiting, and notably the leading voice on the more dovish wing of the FOMC, began a speech with quotes from Paul Volcker. “Forty years ago, Paul Volcker noted that the dual mandate isn’t an either-or proposition and that runaway inflation ‘would be the greatest threat to the continuing growth of the economy… and ultimately, to employment’.”  

She then went on to quote another former Fed chair, Arthur Burns, who noted in the late 1960s that “there can be little doubt that poor people…are the chief sufferers of inflation”.  

That’s now the two big beasts channelling Volcker. On March 3rd, Senator Shelby asked Powell: “Volcker put the economy in a recession to get inflation under control. Are you prepared to do what it takes to get inflation under control?” Powell replied: “I hope history will record that the answer to your question is yes.” Hawkish credentials assured, 50bps of hikes in May and June are nailed on.  

Market is pricing for aggressive rate hike cycle with multiple 50bps hikes to 1.9% by August and 2.7% by the end of the year, a level at which it would be actively restraining potential. It would be the swiftest pace of rate hikes since the Volcker era. Hawk James Bullard has even floated the idea of a 75bps hike. 

A lot the questions will be about where policymakers expect to go over the coming months and whether they see the terminal rate going up. After the Fed meeting on Wednesday, attention shifts to the US nonfarm payrolls report on Friday, though this has lost some importance given the Fed’s hawkish pivot. 

Bank of England 

UK inflation surged to 7% in March, the highest reading in 30 years. Bank of England governor Andrew Bailey is worried about persistently high inflation but warned policymakers are walking a ‘fine line’ trading off the need to tackle inflation with the risk of sparking a recession that further hurts consumers. Despite worries about slowing growth, a tight labour market gives the BoE the room to raise rates for the fourth straight meeting next week. This would take the base rate to 1%, its highest since 2009. Does it offer any relief for sterling? GBPUSD has been crushed by the dollar steamroller – a hawkish BoE could help ease the pain. Markets are already pricing for the Bank to raise rates to 2.5% by this time next year. The risk for sterling bulls right now is that the BoE disappoints like it has in the past. However we might already be at the peak of central bank divergence thinking that has driven the dollar to multi-year highs.

Reserve Bank of Australia 

The RBA has been sliding gently into a position to tighten policy over the last few months and it could be ready to surprise the market with a rate hike this week. Unemployment has fallen to a record low 4% and inflation in the first quarter has ballooned to 5.1%. Key wage data – which needs to be at 3% inflation – is not released until after the meeting, but the RBA might not wait. Whether it hikes or not, relief for the AUD is likely to be limited due to the situation in China and broad weak macro environment. 


Earnings Season 

02.05  03.05  04.05  05.05  06.05 
 Arista Networks (ANET) AMC 


 Pfizer (PFE) PMO 


Activision Blizzard (ATVI) E 


Advanced Micro Devices (AMD) AMC 


Airbnb (ABNB) AMC 


Starbucks Corp (SBUX) AMC 


Barrick Gold (GOLD) PMO 


Lumentum Holdings (LITE) PMO 


Moderna (MRNA) PMO 


Twilio (TWLO) AMC 


Uber Technologies (UBER) AMC 


 Ball Corp (BLL) PMO 


Shopify (SHOP) PMO 


Block Inc (SQ) AMC 


Illumina (ILMN) AMC 


Lucid Group (LCID) AMC 


Peloton (PTON) E 


Virgin Galactic (SPCE) AMC 


 Alibaba (BABA) E 



Major economic data 

Mon May 2  All Day  CNH    Bank Holiday 
  1:30am  JPY    Final Manufacturing PMI 
  2:00am  AUD    MI Inflation Gauge m/m 
  2:30am  AUD    ANZ Job Advertisements m/m 
  6:00am  JPY    Consumer Confidence 
  7:00am  EUR    German Retail Sales m/m 
  7:30am  AUD    Commodity Prices y/y 
  8:00am  CHF    SECO Consumer Climate 
  All Day  GBP    Bank Holiday 
  8:15am  EUR    Spanish Manufacturing PMI 
  8:30am  CHF    Manufacturing PMI 
  8:45am  EUR    Italian Manufacturing PMI 
  8:50am  EUR    French Final Manufacturing PMI 
  8:55am  EUR    German Final Manufacturing PMI 
  9:00am  EUR    Final Manufacturing PMI 
    EUR    Italian Monthly Unemployment Rate 
  2:30pm  CAD    Manufacturing PMI 
  2:45pm  USD    Final Manufacturing PMI 
  3:00pm  USD    ISM Manufacturing PMI 
    USD    Construction Spending m/m 
    USD    ISM Manufacturing Prices 
  Tentative  USD    Loan Officer Survey 
  11:45pm  NZD    Building Consents m/m 
Tue May 3  All Day  JPY    Bank Holiday 
  All Day  CNH    Bank Holiday 
  5:30am  AUD    Cash Rate 
    AUD    RBA Rate Statement 
  7:45am  EUR    French Gov Budget Balance 
  8:55am  EUR    German Unemployment Change 
  9:30am  GBP    Final Manufacturing PMI 
  10:00am  EUR    PPI m/m 
    EUR    Unemployment Rate 
  All Day  EUR    Eurogroup Meetings 
  3:00pm  USD    JOLTS Job Openings 
    USD    Factory Orders m/m 
  All Day  USD    Wards Total Vehicle Sales 
  Tentative  NZD    GDT Price Index 
  10:00pm  NZD    RBNZ Financial Stability Report 
  11:30pm  AUD    AIG Construction Index 
  11:45pm  NZD    Employment Change q/q 
    NZD    Unemployment Rate 
    NZD    Labor Cost Index q/q 
Wed May 4  12:01am  GBP    BRC Shop Price Index y/y 
  All Day  JPY    Bank Holiday 
  All Day  CNH    Bank Holiday 
  2:00am  NZD    ANZ Commodity Prices m/m 
  2:30am  AUD    Retail Sales m/m 
  7:00am  EUR    German Trade Balance 
  8:00am  EUR    Spanish Unemployment Change 
  8:15am  EUR    Spanish Services PMI 
  8:45am  EUR    Italian Services PMI 
  8:50am  EUR    French Final Services PMI 
  8:55am  EUR    German Final Services PMI 
  9:00am  EUR    Final Services PMI 
  9:30am  GBP    M4 Money Supply m/m 
    GBP    Mortgage Approvals 
    GBP    Net Lending to Individuals m/m 
  10:00am  EUR    Retail Sales m/m 
  Tentative  EUR    German 10-y Bond Auction 
  1:15pm  USD    ADP Non-Farm Employment Change 
  1:30pm  CAD    Trade Balance 
    USD    Trade Balance 
  2:45pm  USD    Final Services PMI 
  3:00pm  USD    ISM Services PMI 
  3:30pm  USD    Crude Oil Inventories 
  7:00pm  USD    FOMC Statement 
    USD    Federal Funds Rate 
  7:30pm  USD    FOMC Press Conference 
Thu May 5  All Day  JPY    Bank Holiday 
  2:30am  AUD    Building Approvals m/m 
    AUD    Trade Balance 
  2:45am  CNH    Caixin Services PMI 
  7:00am  EUR    German Factory Orders m/m 
  7:30am  CHF    CPI m/m 
  7:45am  EUR    French Industrial Production m/m 
  9:30am  GBP    Final Services PMI 
  Tentative  EUR    Spanish 10-y Bond Auction 
  All Day  All    OPEC-JMMC Meetings 
  Tentative  EUR    French 10-y Bond Auction 
  Tentative  GBP    10-y Bond Auction 
  12:00pm  GBP    BOE Monetary Policy Report 
    GBP    MPC Official Bank Rate Votes 
    GBP    Monetary Policy Summary 
    GBP    Official Bank Rate 
  12:30pm  USD    Challenger Job Cuts y/y 
  1:30pm  USD    Unemployment Claims 
    USD    Prelim Nonfarm Productivity q/q 
    USD    Prelim Unit Labor Costs q/q 
  3:30pm  USD    Natural Gas Storage 
  11:30pm  AUD    AIG Services Index 
Fri May 6  12:30am  JPY    Tokyo Core CPI y/y 
  12:50am  JPY    Monetary Base y/y 
  2:30am  AUD    RBA Monetary Policy Statement 
  6:45am  CHF    Unemployment Rate 
  7:00am  EUR    German Industrial Production m/m 
    GBP    Halifax HPI m/m 
  7:45am  EUR    French Prelim Private Payrolls q/q 
  8:00am  CHF    Foreign Currency Reserves 
  9:00am  EUR    Italian Retail Sales m/m 
  9:30am  GBP    Construction PMI 
  1:30pm  CAD    Employment Change 
    CAD    Unemployment Rate 
    USD    Average Hourly Earnings m/m 
    USD    Non-Farm Employment Change 
    USD    Unemployment Rate 
  3:00pm  CAD    Ivey PMI 
  8:00pm  USD    Consumer Credit m/m 
  9:00pm  USD    FOMC Financial Stability Report 


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