Coffee Break

Coffee Break:
  • Week

Last week in a nutshell

  • In the US, the Federal Reserve Bank hiked its funds rate by 50bps, the biggest hike since 2000 and announced it should start a balance sheet reduction in June. Chairman Jerome Powell confirmed that additional tightening measures are on the table (50bps) for the next couple of meetings.
  • The US job report confirmed the creation of 428K non-farm payrolls. Average hourly wages in April were 5.5% higher than a year ago while the unemployment rate remained stable at 3.6%. Employment registered a drop of 353k – its first decline since April 2020.
  • The GBP hit a low against the USD in the aftermath of a 25bps rate hike and a dire outlook by the Bank of England.
  • Global PMIs for April slowed somewhat in the face of the war in Ukraine. Service activity resisted well as virus containment measures were relaxed further. Firms are however facing soaring costs and are passing some of that burden onto consumers.

What’s next?

  • Inflation will be one of the key focus points with data released in key countries including the US and China.
  • China will also release data on trade, giving us additional cues on how recent COVID-19 social distancing measures in mainland China have impacted economic growth.
  • Preliminary data on economic sentiment in the euro zone and the US will help us gauge how households and corporates are assessing the state of the economy.
  • On the geopolitical front, investors will follow Victory Day in remembrance of the end of WWII, traditionally marked by a military parade and a President's speech in Russia, a special US-ASEAN Summit in Washington and if Finland and Sweden decide whether to apply for NATO membership.

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