Top Things to Watch

Last week, the US non-farm jobs report missed forecasts for the first time in six months.

These were bad news for the economy but turn out to be excellent news for financial markets: stocks soared and yields plunged, hence such data was received as signal that has the potential to push the Fed to cut interest rates.

Such reaction is a reminder that when it comes to markets, expectations are everything.

As of today morning (Sunday), financial markets are pricing-in a 67% chance of a first rate cut in September, according to the Investing.com Fed Monitor Tool .

Next week doesn't have relevant catalysts for the U.S. economic, meaning that volatility is unlikely to surge and may stay contained for now.

In such scenario, here are the events I'll be keeping my eyes on:

May 7th

Australia: RBA interest rate decision

Last week, as inflation data for Q1 came higher-than-expected, markets removed prior bets in favour of rate cuts and started to price in the potential for another rate hike later this year.

Additionally, global risk sentiment has improved due to geopolitical tensions generated by the Israel-Iran conflict, meaning analysts foresee a potential increase in Oil and other energy products, as well as some supply chain constraints, both concomitant scenarios with the potential to push prices higher.

Markets are now awaiting for the timing in which RBA (Reserve Bank of Australia) will announce an interest rate hike.

May 9th

UK: BoE interest rate decision

No changes are expected in BoE (Bank of England) monetary policy, and forecasts as to when rates might fall have been pushed back, to the point where the market is pricing-in one small reduction this year, possibly in the third quarter.

UK policymakers are dealing with an anemic economy, and the OECD forecasted that the UK will be the weakest economy in the G7 group next year.

GDP data will be published on May the 10th and will most likely confirm economic stagnation.

May 10th

Euro Area: ECB Monetary Policy Meeting Accounts

The ECB (European Central Bank) is expected to start interest rate reductions next month.

US: Michigan Consumer Sentiment

This Index focuses on three areas: how consumers view prospects for their own financial situation, how they view prospects for the general economy over the near term, and their view of prospects for the economy over the long term.

Consumer Sentiment (or Confidence) aggregates subjective evaluations of how American's perceive the economy and its likely future prospects. Despite such biased vision, traders, investors, analysts and policymakers trust this survey has it has proven to be an accurate indicator of the future course of US economy.

May 11th

China: Inflation rate YoY

I know this reports comes out on a Saturday, but the Consumer Price Index evolution is crucial to confirm if China is finally coming out from a stagflation scenario.

IMF has raised its regional growth forecast for Asia to 4.5 percent in 2024. This revision reflects upgrades for China, where government stimulus are expected to provide support for growth.

China is world's second largest economy and has a direct impact on the demand for a wide variety of commodities including aluminum and copper.??