As expected, markets were incredibly volatile last week as geopolitical concerns brought about by the conflict in the Middle East between the US, its allies, and Iran dominated news headlines and market moves.
On the data front, US employment numbers took a big dive on Friday as Non-Farm Payroll data came in nearly 150k under expectations and the Unemployment Rate pushed up to 4.4%. However, the market reaction was more muted than would normally be expected due to the inflationary concerns in the market linked to the Middle East conflict.
With no short-term end in sight for the conflict, traders are expecting geopolitical concerns and news updates to again dominate market moves in the days ahead. However, once again there is a good amount of key US data due out, including two big inflation updates, that should also add more volatility to the market in the days ahead.
Here is our usual day-by-day breakdown of the major risk events this week:
Traders are bracing for more gapping on the Monday open as the market prices in developments from the Middle East over the weekend. However, there will be a shift of focus to data later in the Asian session, with key Chinese CPI and PPI data due out. There is little on the calendar in the latter two sessions of the day, so expect geopolitical updates to dominate sentiment.
Tuesday is very quiet on the event calendar for the entire day, with only lower-tier data scheduled, so expect geopolitical updates to influence the majority of moves through the sessions.
It is a similar story on Wednesday in terms of scheduled macroeconomic releases for the first two trading sessions of the day. However, the New York session sees the release of the key US CPI numbers, which should see some moves in markets. US Crude Oil Inventory data is due out later in the day as well, but expect supply concerns from the Gulf to overshadow the data impact.
The Asian session again has little to offer in terms of economic updates. However, UK markets will come into focus on the London open, with Bank of England Governor Andrew Bailey due to talk early in the day. The New York session sees the usual Weekly Unemployment Claims data out early in the session, and we hear from the Fed’s Michelle Bowman later in the day.
Friday is the biggest day of the week on the event calendar, and once again it all comes later in the day. Nothing of note again in the Asian session, but we have key UK data again in the London session, this time in the form of the latest GDP data. But the New York session has a huge amount of data due out of the US, which could add more volatility to what has already likely been a busy week. Canadian employment numbers are due out early in the session, but these are likely to be overshadowed by the US numbers. The Fed’s favoured inflation data, the Core PCE data, is out early in the day alongside the GDP and Durable Goods numbers, while later in the session the JOLTS Job Openings data is released before we round out the calendar week with the University of Michigan Preliminary Consumer Sentiment and Inflation Expectations numbers.
