2ndApril 2024Tuesday On Tuesday,the financial markets will be...

2^ndApril 2024

Tuesday

On Tuesday,the financial markets will be keenly focused on a series of pivotal economicupdates, starting with insights from the Reserve Bank of Australia's MonetaryPolicy Meeting minutes, revealing the country's monetary policy future. The daywill also feature Germany's Preliminary Consumer Price Index data and the UK'sNationwide Housing Prices, which will offer important insights into inflationand housing market trends, respectively. Significantly, Germany's Prelim CPImonth-on-month data and the United States' JOLTS Job Openings report areexpected to have a substantial impact on market dynamics, reflecting criticalinflation and employment trends in two of the world's leading economies.Moreover, the final manufacturing PMIs from Germany, Spain, Italy, and Francewill also be disclosed, poised to influence market sentiments moderately. Thesecombined disclosures are set to provide a comprehensive view of the globaleconomic environment, guiding investors and policymakers in their decisions.

AUD - Monetary Policy Meeting Minutes

The MonetaryPolicy Meeting Minutes are an essential document released eight times a year,typically two weeks following the announcement of the Cash Rate. These minutesoffer a comprehensive record of the Reserve Bank Board's most recent meeting,shedding light on the in-depth discussions and economic analyses that shapedtheir decision regarding interest rate settings. Traders and financial analystsclosely monitor these minutes for any signs of a hawkish stance—indicating apotential increase in interest rates—which is generally seen as positive forthe currency, as it can lead to higher yields for investors. The minutesprovide valuable insights into the economic conditions and considerations that influencethe central bank's policy decisions, making them a critical resource forunderstanding future monetary policy directions.

In its firstmeeting of 2024, the Reserve Bank of Australia had decided to keep the cashrate unchanged at 4.35%, following a cumulative increase of 425 basis pointsover the previous two years aimed at curbing post-pandemic inflationarypressures. Despite a softening in cost pressures, inflation had continued to bepronounced, particularly driven by sustained service sector prices. The centralbank had left the door open for potential future rate hikes, indicating suchdecisions would be guided by incoming data and risk evaluations. It hadreiterated its commitment to guiding inflation back within the 2-3% targetrange by 2025, with particular emphasis on achieving the midpoint by 2026.Additionally, the bank had confirmed its ongoing commitment to closely watchover global economic trends, domestic demand, inflation trajectories, and labormarket conditions, all the while maintaining the Exchange Settlement balancesrate at 4.25%.

TL;DR

	Aspect	Details
1	Cash Rate	Unchanged at 4.35%
2	Previous Adjustments	Cumulative increase of 425 basis points over the past two years
3	Objectives	Aimed at curbing post-pandemic inflationary pressures
4	Inflation	Pronounced, particularly driven by sustained service sector prices
5	Future Rate Hikes	Possibility left open, subject to incoming data and risk evaluations
6	Inflation Target	Guiding inflation back within the 2-3% target range by 2025, with emphasis on achieving the midpoint by 2026
7	Monitoring Factors	Global economic trends, domestic demand, inflation trajectories, and labor market conditions
8	Exchange Settlement Balances Rate	Maintained at 4.25%

The upcoming Monetary Policy Meeting Minutesare set to be published on Tuesday at 12:30 AM GMT.

GBP - Nationwide Housing Prices m/m

The NationwideHousing Price Index (HPI) is a significant indicator for the UK, trackingchanges in the selling prices of homes with mortgages supported by Nationwideand standing as one of the earliest measures of housing inflation in thecountry. When the index reports a reading above market expectations, it isgenerally viewed as a positive or bullish signal for the British Pound (GBP),suggesting a robust housing market. Conversely, readings below expectations areseen as negative or bearish for the GBP, indicating potential softness in thehousing sector.

In February2024, the Nationwide House Price Index in the United Kingdom experienced a 0.7%increase from the previous month, matching the growth rate of the earlierperiod and surpassing market forecasts, which had anticipated a modest 0.3%rise.

The forecast forthe monthly change in Nationwide Housing Prices is set at 0.3%, adecline from the previous month's increase of 0.7%.

The next Nationwide Housing Prices m/m is set to be releasedon Monday at 6:00 AM GMT.

GBP - Nationwide Housing Prices y/y

The NationwideHouse Price Index, compiled by the UK's second-largest mortgage provider,Nationwide Building Society, serves as an essential gauge of the country'saverage house price movements. Focusing solely on its mortgage approvals,Nationwide's index, which accounts for about 10% of the mortgage market,exclusively considers owner-occupied properties sold at genuine market values,excluding sales such as council estates. With its inception in 1952 forquarterly reports and an expansion to monthly indices in 1993, Nationwideprovides a long-standing and reliable measure of property price trends, similarto the Halifax index in being volume-weighted based on typical transactionprices. Market analysts view readings above expectations as favorable for theBritish Pound (GBP), whereas figures below anticipated levels are seen asnegative.

In February2024, the Nationwide House Price Index in the United Kingdom witnessed a 1.2%increase from the year prior, marking an end to a year-long trend of declinesand surpassing the anticipated 0.7% rise. This resurgence in the housing marketis attributed to the reduced borrowing costs at the year's outset and alessening strain on household finances. However, the ongoing uncertainty aboutfuture interest rate changes remains a potential hindrance to a full-fledgedrecovery in the housing sector. Despite the fact that borrowing costs are stillbelow the highs seen last summer, there's been a notable increase in swaprates, which are crucial for setting fixed-rate mortgage prices, followingtheir significant drop in late December.

	Aspect	Details
1	House Price Index	Witnessed a 1.2% increase from the year prior, ending a year-long trend of declines
2	Anticipated Rise	Surpassed the anticipated 0.7% rise
3	Contributing Factors	Reduced borrowing costs at the year's outset, lessening strain on household finances
4	Uncertainty	Ongoing uncertainty about future interest rate changes remains a potential hindrance to full-fledged housing market recovery
5	Borrowing Costs	Still below highs seen last summer
6	Swap Rates	Notable increase following significant drop in late December, crucial for setting fixed-rate mortgage prices

The forecast forthe Nationwide Housing Prices y/y is projected at 2.4%, showingan increase from the previous figure of 1.2%.

The upcomingannouncement for the Nationwide Housing Prices y/y is scheduled for Mondayat 6:00 AM GMT.

EUR - Spanish Manufacturing PMI

The S&PGlobal Spain Manufacturing PMI, a key indicator derived from a survey of 400industrial companies, gauges the manufacturing sector's health based on five weightedindexes: New Orders (30%), Output (25%), Employment (20%), Suppliers’ DeliveryTimes (15%, inverted for comparable directionality), and Stock of ItemsPurchased (10%). A PMI reading above 50 signifies sector expansion, below 50indicates contraction, and exactly 50 denotes no change. This index, releasedby S&P Global and Hamburg Commercial Bank (HCOB), is crucial forunderstanding business conditions in the manufacturing sector, which plays asignificant role in Spain's GDP and, by extension, offers insights into thecountry's economic health and sentiment towards the Euro.

In February2024, the HCOB Spain Manufacturing PMI climbed to 51.5 from 49.2 the previousmonth, outperforming the anticipated forecast of 50 and marking the sector'sfirst expansion in almost a year. This positive shift was primarily driven by aslight increase in output and new orders, fueled by a resurgence in domesticdemand. Additionally, employment and purchasing activities experienced growth.Despite these improvements, the month saw the most significant extension indelivery times since September 2022, attributed to disruptions in the Red Seaand related issues in the Suez Canal. On the pricing front, there was a nominaluptick in input costs, the first in a year, while output charges continued tofall, although at the slowest pace since the previous August, due tocompetitive pressures and strategies to attract new business. Moreover,business confidence soared to a two-year peak, bolstered by optimisticexpectations of sustained sales and demand growth in the year ahead.

TL;DR

	Aspect	Details
1	Manufacturing PMI	Climbed to 51.5 from 49.2 the previous month, marking sector's first expansion in almost a year
2	Performance vs. Forecast	Outperformed anticipated forecast of 50
3	Driving Factors	Slight increase in output and new orders, fueled by resurgence in domestic demand
4	Employment and Purchasing Activities	Experienced growth
5	Delivery Times	Saw the most significant extension since September 2022, attributed to disruptions in the Red Sea and issues in the Suez Canal
6	Input Costs	Nominal uptick, first in a year
7	Output Charges	Continued to fall, but at the slowest pace since the previous August, due to competitive pressures and strategies
8	Business Confidence	Soared to a two-year peak, bolstered by optimistic expectations of sustained sales and demand growth in the year ahead

The forecast forthe Spanish Manufacturing PMI stands at 51, slightly below theprevious reading of 51.5.

The next Spanish Manufacturing PMIis set to be released on Monday at 7:15 AM GMT.

EUR - Italian Manufacturing PMI

TheManufacturing Purchasing Managers Index (PMI) for Italy, released by S&PGlobal and Hamburg Commercial Bank (HCOB), is a critical gauge of themanufacturing sector's health, influencing the broader economic outlook giventhe sector's substantial contribution to GDP. Derived from a survey of 400industrial companies, the PMI assesses business conditions through a weightedcomposition of five key indices: New Orders (30%), Output (25%), Employment(20%), Suppliers’ Delivery Times (15%, inverted for consistency), and Stock ofItems Purchased (10%). A PMI reading above 50 signals expansion in themanufacturing sector, indicating bullish prospects for the Euro, while areading below 50 suggests contraction, potentially bearish for the currency,with a score of 50 denoting stability.

In February2024, the HCOB Italy Manufacturing PMI experienced a marginal increase to 48.7from 48.5 in January, falling short of the anticipated 49.1 marketexpectations. This minor improvement, the least pronounced in an 11-monthdownturn, underscores the persistent challenges faced by Italy's manufacturingsector, attributed to subdued demand and ongoing geopolitical tensions. Despitenearing a year of contraction, the sector saw an acceleration in outputdecline, while delivery times from suppliers improved slightly, unaffected bythe Red Sea crisis. Conversely, the rates of decline in new orders andinventory levels moderated, and for the first time in five months, firmsreported workforce expansion. The price landscape continued to follow adeflationary trend. Nevertheless, future production outlooks among companiesremained optimistic, hovering above historical averages, fueled by hopes foreconomic resurgence and more stable geopolitical conditions.

TL;DR

	Aspect	Details
1	Manufacturing PMI	Marginal increase to 48.7 from 48.5 in January, falling short of anticipated 49.1 market expectations
2	Performance vs. Forecast	Minor improvement, least pronounced in an 11-month downturn
3	Challenges	Persistent challenges attributed to subdued demand and ongoing geopolitical tensions
4	Output and Delivery Times	Sector saw acceleration in output decline, while delivery times improved slightly, unaffected by the Red Sea crisis
5	New Orders and Inventory Levels	Rates of decline moderated, and for the first time in five months, firms reported workforce expansion
6	Price Landscape	Continued to follow a deflationary trend
7	Future Production Outlook	Optimistic outlook among companies, hovering above historical averages, fueled by hopes for economic resurgence and stable geopolitics

The forecast forthe Italian Manufacturing PMI suggests a slight improvement to 48.8from the previous reading of 48.7.

The upcoming ItalianManufacturing PMI is set to be released on Tuesday at 7:45 AMGMT.

EUR - French Final Manufacturing PMI

The HCOB FranceManufacturing PMI, compiled by S&P Global from monthly surveys ofapproximately 400 manufacturing purchasing managers, serves as a leadingindicator of economic health. The PMI is a composite index based on five keycomponents: New Orders (30%), Output (25%), Employment (20%), Suppliers’Delivery Times (15%, inverted for comparability), and Stocks of Purchases(10%). It operates on a diffusion index scale from 0 to 100, where a readingabove 50 signifies manufacturing expansion and below 50 indicates contraction.The index is closely monitored for its early insights into business conditions,including employment, production, and prices, reflecting the purchasingmanagers' current and relevant perspectives on the economy. Released monthly,on the first business day following the month's end, the PMI includes bothFlash and Final reports, with the Flash release generally having a more significantmarket impact.

In March 2024,the S&P Global France Manufacturing PMI declined to 45.8 from February'sone-year peak of 47.1, falling short of the expected 47.5, marking the 14thconsecutive month of contraction in the sector. This downturn was characterizedby the lowest output levels since January 2023 and a significant decline insales, attributed to client reluctance, challenging economic conditions, andinflationary pressures. Despite these challenges, job losses in the sector wereminimal, and supply chain disruptions from incidents in the Red Sea did notprevent an increase in delivery times, indicating some stability. Input costsrose to a near-year high in February, while selling prices increased at a moremoderate rate, marking the softest rise in over three years. Nonetheless,manufacturers maintained a positive outlook for the next 12 months.

TL;DR

	Aspect	Details
1	Manufacturing PMI	Declined to 45.8 from February's one-year peak of 47.1, falling short of the expected 47.5, marking the 14th consecutive month of contraction
2	Output and Sales Levels	Lowest output levels since January 2023, significant decline in sales attributed to client reluctance, challenging economic conditions, and inflationary pressures
3	Job Losses and Supply Chain	Minimal job losses, supply chain disruptions from incidents in the Red Sea did not prevent an increase in delivery times, indicating some stability
4	Input and Selling Prices	Input costs rose to a near-year high in February, while selling prices increased at a more moderate rate, marking the softest rise in over three years
5	Future Outlook	Manufacturers maintained a positive outlook for the next 12 months

The forecast forthe French Manufacturing PMI suggests a decrease to 45.8 from theprevious figure of 47.1.

The upcomingrelease of the French Final Manufacturing PMI is scheduled for Tuesdayat 7:50 PM GMT.

EUR – German Final Manufacturing PMI

The HCOB GermanyManufacturing PMI, crafted by S&P Global from surveys of around 420manufacturing purchasing managers, serves as a pivotal gauge for Germany'smanufacturing sector and, by extension, Europe's industrial health. The PMI, acomposite index based on five key components—New Orders (30%), Output (25%),Employment (20%), Suppliers’ Delivery Times (15%, inversely calculated), andStocks of Purchases (10%)—provides a comprehensive snapshot of businessactivity. Readings above 50 signal expansion, positively impacting the Euro(EUR), while those below 50 indicate contraction, suggesting a bearish outlook forthe EUR. This monthly indicator not only reflects current business conditionsbut also aids in forecasting broader economic trends, including GDP, industrialproduction, and inflation, underscoring its significance to investors andpolicymakers alike.

In March 2024,the HCOB Germany Manufacturing PMI saw a decline to 41.6 from February's 42.5,falling short of the anticipated 43.1 according to preliminary estimates,marking the sharpest downturn in the sector in five months. Despite a marginalslowdown in the pace of output reduction, the sector faced significantchallenges, notably a steep drop in backlogs which led to further job cuts infactories. On a brighter note, the decrease in manufacturing purchase pricesmoderated to its slowest rate in a year, and there was a more pronounceddecline in factory gate charges. Additionally, after a temporary dip inFebruary, optimism within the manufacturing sector rebounded, signaling apotential shift towards a more positive outlook.

TL;DR

	Aspect	Details
1	Manufacturing PMI	Declined to 41.6 from February's 42.5, falling short of anticipated 43.1 according to preliminary estimates, marking the sharpest downturn in the sector in five months
2	Challenges	Significant challenges faced, notably a steep drop in backlogs leading to further job cuts in factories
3	Output and Prices	Marginal slowdown in pace of output reduction, decrease in manufacturing purchase prices moderated to its slowest rate in a year, more pronounced decline in factory gate charges
4	Future Outlook	After a temporary dip in February, optimism within the manufacturing sector rebounded, signaling a potential shift towards a more positive outlook

The forecast forthe HCOB Manufacturing PMI suggests a figure of 41.6, showing adecline from the previous reading of 42.5.

The upcomingrelease of the HCOB Manufacturing PMI is scheduled for Tuesday at7:55 AM GMT.

EUR - Consumer Price Index y/y

The GermanConsumer Price Index (CPI), compiled monthly by Destatis, serves as a criticalgauge of inflation by tracking the average price shift for a broad array ofgoods and services consumed by households. The Year-over-Year (YoY) comparison,which assesses price changes against the same month in the previous year, playsa pivotal role in understanding inflationary trends and shifts in consumerbehavior, with significant implications for the Euro (EUR); higher readingstypically bolster the EUR, while lower figures can dampen its value. The CPIbasket is heavily weighted towards Housing, water, electricity, gas, and otherfuels, which constitute 32% of the total, followed by Transport (13%),Recreation, entertainment, and culture (11%), and Food & non-alcoholicbeverages (10%). Other notable categories include Miscellaneous goods &services, Furniture and household items, Restaurant & accommodationservices, Health, and Clothing & footwear, together making up 27% of theindex, with the final 7% comprising Alcoholic beverages & tobacco,Communication, and Education.

In February 2024,Germany's inflation rate experienced a notable decline, settling at +2.5%year-on-year, the lowest since June 2021 and a marked decrease from the +2.9%recorded in January and +3.7% in December 2023. According to Ruth Brand,President of the Federal Statistical Office, this slowdown was attributed tofalling energy product prices, which dropped by 2.4% compared to the same monththe previous year, despite the cessation of energy price brakes and theintroduction of a higher carbon tax. Additionally, the increase in food pricessignificantly slowed to just +0.9%, with notable declines in the costs of freshvegetables and dairy products. While goods prices saw a below-average rise of1.8%, service prices went up by 3.4%, influenced by various factors includingthe "Germany ticket" for public transport, which led to cheapercombined tickets for rail and bus. This period also witnessed the firstmonth-on-month job growth in manufacturing in the last four months, signalingpotential optimism in the economic climate.

TL;DR

	Aspect	Details
1	Inflation Rate	Experienced a notable decline, settling at +2.5% year-on-year, the lowest since June 2021, marked decrease from +2.9% in January and +3.7% in December 2023
2	Contributing Factors	Falling energy product prices (-2.4% compared to the previous year), slowdown in food price increase to +0.9%, significant declines in fresh vegetables and dairy product costs
3	Goods and Service Prices	Goods prices rose below average at 1.8%, service prices increased by 3.4%, influenced by factors including the "Germany ticket" for public transport
4	Job Growth in Manufacturing	First month-on-month job growth in manufacturing in the last four months, signaling potential optimism in the economic climate

The projectionfor the German CPI y/y is anticipated to be 2.4%, slightly lowerthan the previous figure of 2.5%.

The upcoming release of the German CPIy/y is set for Tuesday at 12:00 PM GMT.

EUR - German Prelim CPI m/m

The GermanPreliminary Consumer Price Index (CPI) serves as a crucial measure of thechange in prices for goods and services bought by consumers each month.Announced toward each month's end, this index is presented in two phases, withthe Preliminary version being the initial one, released about 15 days beforethe final version. This initial release is particularly significant forfinancial markets as it provides an early glimpse into consumer inflationwithin the Eurozone, making it a key indicator for traders and financialanalysts. Since consumer prices make up a significant portion of overallinflation, this data is closely monitored as it can influence the decisions ofcentral banks. Typically, an increase in inflation can lead to higher interestrates, affecting the value of the currency by making it more appealing to investorsseeking higher returns.

In February2024, Germany's inflation rate was recorded at 2.5%, reaching its lowest pointsince June 2021. Consumer prices saw a 0.4% increase from January 2024, basedon provisional data from the Federal Statistical Office (Destatis). Energyprices fell by 2.4% year-over-year, even as the energy price brake concludedand a higher carbon price on fossil fuels was introduced. Food price inflationalso decelerated to 0.9%, falling below the overall inflation rate for the firsttime since November 2021. The core inflation rate, which excludes food andenergy, was at 3.4%. Furthermore, the harmonized index of consumer prices(HICP), which omits certain items like owner-occupied housing costs, showed a2.7% increase year-over-year and a 0.6% rise from the previous month. Thesestatistics underscore the subtle distinctions between the CPI and HICP incapturing inflation, highlighting varied effects across different productgroups and consumer spending.

TL;DR

	Aspect	Details
1	Overall Inflation Rate	Recorded at 2.5%, reaching its lowest point since June 2021
2	Month-on-Month Change	Consumer prices increased by 0.4% from January 2024
3	Energy Prices	Fell by 2.4% year-over-year despite the conclusion of the energy price brake and introduction of a higher carbon price on fossil fuels
4	Food Price Inflation	Decelerated to 0.9%, falling below the overall inflation rate for the first time since November 2021
5	Core Inflation Rate	Excluding food and energy, stood at 3.4%
6	Harmonised Index of Consumer Prices (HICP)	Showed a 2.7% increase year-over-year and a 0.6% rise from the previous month, excluding certain items like owner-occupied housing costs
7	Differences Between CPI and HICP	Highlighted the varied effects across different product groups and consumer spending, underscoring subtle distinctions in capturing inflation

The forecast forthe German Preliminary CPI m/m indicates a decrease to 2.2% fromthe previous rate of 2.5%.

The German Preliminary CPI m/m isset to take place on Tuesday at 12:00 PM GMT.

USD - JOLTS Job Openings

The JOLTS JobOpenings report is a key labor market indicator that measures the number of jobvacancies in the United States during a given month, with the exception of thefarming industry. This report is issued monthly, approximately 35 days afterthe end of the reported month. Despite its relatively late release, the JOLTSdata is highly regarded by economists and traders alike because job openingsserve as a leading indicator of overall employment health. A high number of jobopenings typically signals a robust labor market, which can influence consumerspending and overall economic growth, thereby potentially impacting monetarypolicy decisions and market sentiment.

In January, USjob openings slightly declined to 8.86 million from a revised figure of 8.89million, showcasing continued robustness in the labor market, as reported bythe Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS).This minor reduction in job vacancies, along with marginal decreases in hiringand layoffs, underscores the persistent strong demand for workers. The JOLTSreport, which also incorporated annual adjustments going back to January 2019,revealed that job openings for 2023 were slightly revised down but havestabilized around the present level for the past three months. While certainsectors like trade, transportation, retail, and government saw a decline inopenings, areas such as leisure and hospitality, professional and businessservices, and health care experienced growth. The labor market's resilience isfurther highlighted by the existence of more than one job for every individualseeking employment in the US, with the ratio of job openings to unemployedpersons maintaining a steady rate of around 1.4. Furthermore, the number ofindividuals voluntarily leaving their jobs dropped to a three-year low,reflecting a cautious stance among workers about switching jobs in a graduallycooling labor market. According to analysts at a leading financial news service,the continuous softening in labor demand coupled with workers' inclination toremain in their current positions could lead to diminished wage pressures,potentially impacting the Federal Reserve's approach to interest rates. TheFed, which has been wary of ongoing inflation, has shown reluctance to reduceinterest rates, a sentiment echoed by Chair Jerome Powell during his testimony.In a related development, a report from the ADP Research Institute indicated amodest uptick in hiring by private-sector employers across various industries,regions, and company sizes. Nevertheless, the accuracy of JOLTS data has beenscrutinized by some economists due to its low response rate.

TL;DR

	Aspect	Details
1	Job Openings	Slightly declined to 8.86 million from a revised figure of 8.89 million, showcasing continued robustness in the labor market
2	Hiring and Layoffs	Marginal decreases alongside the minor reduction in job vacancies, underscoring persistent strong demand for workers
3	Sectoral Trends	Certain sectors saw a decline in openings, while others experienced growth
4	Job Openings to Unemployed Persons Ratio	Maintained around 1.4, indicating more than one job for every individual seeking employment
5	Worker Mobility	Number of individuals voluntarily leaving their jobs dropped to a three-year low, reflecting cautious stance about switching jobs in a gradually cooling labor market
6	Impact on Wage Pressures	Softening in labor demand coupled with workers' inclination to remain in current positions could lead to diminished wage pressures, potentially impacting Federal Reserve's approach to interest rates
7	ADP Research Institute Report	Indicated a modest uptick in hiring by private-sector employers
8	Scrutiny of JOLTS Data	Some economists scrutinize the accuracy of JOLTS data due to its low response rate

The projectionfor JOLTS Job Openings suggests a slight decrease to 8.81 millionfrom the previous figure of 8.863 million.

The next JOLTSJob Openings is scheduled for release on Tuesday at 2:00 PM GMT.