In a more surprising turn of events, US Treasury Secretary Steven Mnuchin has indicated that he is optimistic about the possibility of trade tensions with China being eased. Tariff Wars 2.0 With ongoing tariff discussions getting increasingly escalatory. Both the Secretary and President Trump have teased the notion of deep tariff cuts if a trade agreement is achieved. To be sure, next week has a lot of potentially important economic indicators coming. Market participants are eagerly awaiting this data, as it could shift the financial landscape dramatically.
We understand – anticipation is growing! First quarter Consumer Price Index (CPI) rates and March CPI output are pending publication. Analysts province that a predicted further easing of inflationary pressure will have significant ramifications on the Australian dollar. Meanwhile, Japan’s Bank of Japan (BoJ) is set to announce its interest rate decision on Thursday, adding further interest to the week’s economic developments.
Trade Relations with China
Though not a sure thing yet, comments from US Treasury Secretary Janet Yellen suggest a thawing. Such an approach would build trust between the US and China. The Secretary concluded by stating that reducing trade tensions is still possible. This pragmatic enforcement approach can only help to make the economic environment more welcoming. It is clear from him and President Trump’s statements that if an agreement on trade is reached, they are going to enforce deep tariff cuts.
This approach has garnered praise from a wide array of stakeholders. Like their predecessors, they think that winning trade fights will create conditions for a sound global economy. The reduction in tariffs could foster improved trade dynamics not only between the US and China but influence other international trade relationships.
Over the past few months, the US-China trade war has impacted global markets in many different ways. Stakeholders are eager to see real progress toward a solution that would foster greater economic collaboration and investment in the region. Should this be the outcome, it will help restore investor confidence and encourage market activity.
Upcoming Economic Indicators
Next week’s economic calendar is packed with key data releases sure to set market expectations for the FOMC meeting. Thursday, we will get one of the most important figures. Adding to the downside are negatives such as the US weekly initial jobless claims and the ISM manufacturing PMI for April. These indicators are extremely important in judging the overall health of the US economy and majorly impact investor sentiment.
Additionally on the same day, Canada will report its S&P manufacturing PMI number for April. The information in this report will provide important perspective on the state of the manufacturing industry in North America. Market participants will be watching these reports very closely for clues on whether the economy continues to get strong or is starting to weaken.
Germany is soon set to provide baseline data from their program. This involves its GDP and HICP inflation rates, which serve as important bellwethers for the Eurozone’s largest economy. The effects of these releases will further assist in measuring the economic performance and inflationary pressures of this area.
Consumer Sentiment and Confidence
Next week, we’ll get more consumer sentiment/confidence indicators. Germany’s GfK consumer sentiment index for May is due out on Tuesday. In the same vein, the Euro Zone will release their business climate indicators for April. These reports have become one of our favorite leading indicators of what’s happening with the economy and global consumer spending patterns.
US consumer confidence indicator for April is due Tuesday. Our aim with this report is to make sense of how American consumers see and understand their financial situation. This is especially interesting data as consumer spending makes up nearly 70% of the US economy.
Coincidentally, the March JOLTS job openings number will be released that same day. This report has deepened our understanding of labor market dynamics across the state, and it will help shape employment policy in the years ahead.