By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week starting April 27.
A string of decisions by major central banks are due, including from the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England, while markets will continue to scrutinize tensions in the Middle East.
Rates aren’t expected to be changed this month. However, investors will be looking to see how various central banks view the impact of the energy-price spike caused by the Middle East war and how likely it is that rates could move in the coming months as a result.
Key data include the first estimate of U.S. first-quarter gross domestic product and provisional eurozone inflation figures for April. In Asia, China’s PMI readings will be closely watched for signs of momentum ahead of the May Day holiday.
U.S.
The Federal Reserve announces a decision on Wednesday, where it is expected to leave the federal funds target range unchanged at 3.50%-3.75%.
No new forecasts or rate projections are due, leaving focus on the Fed’s commentary regarding the impact of the Middle East conflict and higher energy prices. Investors will watch in particular how much weight policymakers place on concerns about the impact on growth versus concerns about the risks to inflation.
Jerome Powell remains Fed chair for now, but the confirmation hearing for President Trump’s choice for his replacement, Kevin Warsh, was held recently.
Money markets price in unchanged rates this year, according to LSEG data. However, they price a greater risk of the Fed cutting rates than raising them. The U.S., as a net energy exporter, is less exposed to the impact of high energy prices on inflation than many other countries. Trump has also expressed a preference for lower interest rates.
“Our view remains that a Warsh-led Fed would be more dovish on the rates front,” said Jefferies global economist Mohit Kumar in a note. Jefferies expects two rate cuts from the Fed.
The confirmation of the new Fed chair, and any associated shift in policy direction, will remain an important focus, said Rushabh Amin, portfolio manager at Allspring Global Investments in a note.
Investors will also pay close attention to the advance estimate of first-quarter U.S. gross domestic product on Thursday, which will give an indication of how the U.S. economy has fared during the Middle East war. PCE inflation data for March and the first-quarter employment cost index are released on the same day, followed by the ISM survey on manufacturing activity in April on Friday.
Other data include the Conference Board’s consumer confidence survey for April on Tuesday, durable goods and housing starts for March on Wednesday, followed by jobless claims Thursday.
The U.S. Treasury will auction $69 billion in two-year and $70 billion in five-year notes on Monday, as well as $44 billion in seven-year notes on Tuesday.
Canada
The Bank of Canada announces an interest-rate decision on Wednesday, where it is expected to leave the key policy rate unchanged at 2.25%.
With core inflation broadly in line with the central bank’s target and the unemployment rate looking stabilized, another on-hold decision “looks certain,” said ING economist James Knightley in a note.
“Markets are pricing one 25 basis-point rate hike by the end of the year, but we are in the camp that looks for the BOC to leave its monetary policy stance unchanged throughout 2026,” he said.
Canadian gross domestic product data for February are due on Thursday.
Latin America
Brazil’s central bank announces a policy decision on Wednesday, where it could reduce its main Selic rate by 25 basis points to 14.50% from 14.75%.
“High global uncertainty steaming from oil price shock will push the Central Bank of Brazil to deliver another moderate cut in basic rates in April,” HSBC economists said in a note.
Eurozone
The European Central Bank’s policy decision on Thursday is the key event in the single currency area. The ECB is very likely to leave interest rates on hold in order to give it time to analyze the impact of the Middle East war and the increasing oil supply shortage on inflation and growth.
Investors will be keen to hear any hint from the ECB on the potential future need for an insurance interest-rate hike, should it become necessary.
“Financial markets are reacting to the geopolitical back-and-forth with a sense of foresight, which currently reduces the pressure on central banks to act,” analysts at Raiffeisen Bank said. “Inflation rates will continue to rise, however–even in an optimistic conflict scenario.”
Flash estimate CPI data for April from Europe’s major four economies–Germany, France, Italy and Spain–as well as from the eurozone, and first estimate GDP data are up for release. These data will reflect the first impacts of the Middle East war on both inflation and growth.
Eurozone data releases will start with Germany’s GfK consumer climate survey on Monday, followed by Spanish first-quarter unemployment and March retail sales data, Italy’s February industrial turnover and the European Central Bank’s consumer expectations and bank lending surveys on Tuesday.
Flash estimate Spanish and German CPI data are due Wednesday, as well as Italian and eurozone confidence surveys for April and eurozone money supply data for March.
Flash estimate GDP data for the first quarter will be released from France, Spain, Italy, Germany and the eurozone on Thursday.
“Recent survey data point to a softening in activity towards the end of the first quarter as elevated prices and uncertainty weigh on consumption and investment, and we expect a weaker growth picture over the second quarter,” Investec analyst Lottie Gosling said in a note.
Government bond supply will slow ahead of a long weekend. Belgium will hold a bond auction Monday, followed by the Netherlands on Tuesday, Italy on Wednesday and Germany’s February 2036 Bund tap also on Wednesday.
U.K.
The Bank of England announces a policy decision on Thursday and is widely expected to keep its key policy rate at 3.75%.
Focus will center on how policymakers balance concerns about the risk of higher energy prices feeding into inflation and wages in the coming months against the potential harm they could do to the economy.
BOE policymakers are likely to update markets on the central bank’s “reaction function to the U.S.-Iran war,” providing insights on their views on both inflation and growth, Nomura analysts said in a note.
U.K. money markets currently fully price two 25 basis-point rate increases this year, with a first one in July, LSEG data show. However, some analysts expect that rate hikes might not materialize if the damage to the economy from the energy-price shock is significant.
“We expect the [BOE’s] monetary policy committee to signal it will monitor the situation closely and warn that it will hike if the threat of second-round effects mounts,” Investec economist Sandra Horsfield said in a note.
Economic data during the week include the BRC shop price index for April on Tuesday, followed by mortgage lending and consumer credit data for March and the final reading of April manufacturing PMI on Friday.
The U.K. plans two programmatic gilt tenders on Tuesday for the January 2028 gilt and the June 2032 gilt.
Scandinavia
Norway will hold a bond auction on Wednesday.
Japan
The Bank of Japan is widely expected to keep its policy rate unchanged at 0.75% at its two-day meeting ending Tuesday, amid uncertainty over developments in the Middle East. The policy board will also release its latest growth and inflation forecasts. Rising oil prices pose a risk to inflation, but the BOJ is likely to keep its stance of assessing conditions before raising rates further.
“In light of recent developments, including heightened uncertainty surrounding the Middle East, we now expect a hold in April and tentatively push back our forecast for the next hike to June,” said Takayasu Kudo, Japan economist at BofA Global Research. He added that the next increase could be delayed beyond July should disruptions related to the Middle East become protracted.
Government data due Friday is expected to show consumer inflation in Tokyo, excluding volatile fresh food, rose 1.8% in April from a year earlier, following March’s 1.7%, according to a Quick poll. The impact of higher energy prices is likely to be limited by government subsidies.
March unemployment data is due Tuesday, followed by industrial production and retail sales on Thursday.
The Ministry of Finance will hold two auctions during the week. It will sell about 2.8 trillion yen of two-year notes on Thursday and about 250 billion yen of 10-year inflation-indexed bonds on Friday. Demand for the latter might be stronger among investors concerned over rising inflation.
China
All eyes are on gauges of China’s manufacturing and services activity as surveys elsewhere begin to show the strain of supply-chain disruptions and price pressures caused by the war in the Middle East.
Many economists expect to see a pullback in the official manufacturing and nonmanufacturing PMIs for April, with some projecting a slide back below the 50-level separating activity and expansion.
Economists at ING expect to see evidence of price pressures continuing to build in the PMI sub-indexes, and predict that both official gauges will tip back into contraction.
ANZ analysts expect that business confidence will likely have been weighed down by the war, though improving industrial indicators, including higher utilization rates in cement and steel, should lend support to the manufacturing data.
Thursday will also see the release of S&P Global’s RatingDog surveys, which focus more on China’s smaller, private-sector companies.
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