The State of Markets: “Will Lows Be Retested?”
Risk appetite in global markets was strong last week. In particular, the positive tariff news last weekend (and on Monday) generated strong gains in global equities. As such, major US indices are now back at/close to their highs from late February (including the S&P500 & the NASDAQ100). Similarly in Europe various equity indices, like the German DAX, Spanish IBEX, and Italian MIB, have made new record highs this week. With that strong rally, though, signs of complacency/froth are back, and several indices are now overbought. In Europe, for example, that includes EZ banks, which are now over-extended to the upside (see chart below).
The key question, therefore, is: Will US/global equities give back some of their gains in the near term? Will they retest their lows? Or is this renewed uptrend ongoing? We address those questions in recent research (e.g. see this week’s ‘Longview on Friday’).
This coming week there’s a PMI theme, with flash May manufacturing & service sector PMIs for major economies due on Thursday (including the US, Japan, Germany, France, the Eurozone, and the UK). In the US, the Conference Board Leading Index is due on Monday, with existing and new home sales on Thursday and Friday, respectively. There will also be speeches by several Fed members next week. Elsewhere UK inflation (CPI, RPI, & PPI) is due on Wednesday. Please see below for a full list of key upcoming macro data & events.
Key chart: Eurozone banks relative to their 50-day moving average vs. EZ banks (SX7E)
Upcoming important data/events this week:
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Events: |
PBOC policy decision (Tues, 2am); RBA policy decision (Tues, 5:30am). |
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Monday: |
Chinese activity data (industrial production, retail sales, fixed asset, property investment & unemployment rate – Apr, 3am); US Conference Board leading index (Apr, 3pm). |
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Tuesday: |
Eurozone consumer confidence (May first estimate, 3pm). |
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Wednesday: |
UK Headline & core CPI, RPI & PPI (Apr, 7am). |
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Thursday: |
HCOB manufacturing & service sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all May first estimates; German IFO business climate (May, 9am); US S&P manufacturing & service sector PMIs (May first estimates, 2:45pm); US existing home sales (Apr, 3pm). |
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Friday: |
UK Retail sales (Apr, 7am); Japanese headline & core CPI (Apr, 12:30am). |
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Key earnings: |
N/A |
Key Research
Global Macro Report, 14th May 2025:
“Fed’s Dual Mandate (Inflation & Growth): Which Part Matters the Most? a.k.a More Cuts Need to be Priced into the Curve”
OPEC’s strategy is increasingly driven by geopolitics, rather than balancing global supply & demand (i.e. the usual considerations). That’s creating a de facto price war with high cost producers (most importantly US shale), as well as non-compliant OPEC+ members.
Some technical factors suggest that the drawdown in oil prices is advanced (sentiment, for example, is washed out, and positioning is bearish). The contrarian set up for oil therefore supports the case for a rally.
Key North American macro data & events:
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Events: |
Speeches by the Fed’s Bostic & Jefferson (Mon, 1:30pm), Williams in moderated discussion (Mon, 1:45pm), Logan at a financial markets conference (Mon, 6:15pm), Musalem on the economy (Tues, 6pm), Hammack & Daly (Wed, 12am) & Williams gives keynote remarks (Thurs, 7pm); market holiday in Canada on account of Victoria Day (Mon). |
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Monday: |
US Conference Board leading index (Apr, 3pm). |
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Tuesday: |
US Philadelphia Fed service sector activity (May, 1:30pm); Canadian headline & core CPI (Apr, 1:30pm). |
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Wednesday: |
N/A |
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Thursday: |
Canadian CFIB business barometer (May, 12pm); US Chicago Fed national activity (Apr, 1:30pm); Canadian industrial product & raw material price index (Apr, 1:30pm); US weekly jobless claims (1:30pm); US S&P manufacturing & service sector PMIs (May first estimates, 2:45pm); US existing home sales (Apr, 3pm); US Kansas City Fed manufacturing sector activity (May, 4pm). |
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Friday: |
Canadian retail sales (Mar, 1:30pm); US new home sales (Apr, 3pm); US Kansas City Fed service sector activity (May, 4pm). |
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Key earnings: |
Home Depot, Palo Alto Networks (Tues); TJX, Lowe’s, Medtronic (Wed); Intuit, Analog Devices, Workday, Autodesk (Thurs); PDD Holdings (Fri). |
Fig B: US Conference Board leading index (Y-o-Y %)
Key European macro data & events
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Events: |
Speeches by the ECB’s Wunsch at AFME event in Frankfurt (Tues, 7:55am), Knot on DNB’s financial stability overview (Tues, 11am), Lane on NIRP in Madrid (Wed, 5pm), Holzmann in Vienna (Thurs, 8am), Vujcic in Croatia (Thurs, 9:20am)& Lane in Florence (Fri, 9:30am); ECB publishes account of April 16-17 policy meeting (Thurs). |
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Monday: |
Eurozone headline & core CPI (April final estimate, 10am). |
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Tuesday: |
German PPI (Apr, 7am); Eurozone ECB current account (Mar, 9am); Italian current account balance (Mar, 9:30am); Eurozone construction output (Mar, 10am); Eurozone consumer confidence (May first estimate, 3pm). |
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Wednesday: |
N/A |
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Thursday: |
French INSEE business & manufacturing confidence (May, 7:45am); HCOB manufacturing & service sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all May first estimates; German IFO business climate (May, 9am); French retail sales (Apr). |
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Friday: |
German GDP (Q1 final estimate, 7am); French INSEE consumer confidence (May, 7:45am). |
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Key earnings: |
Assicurazioni Generali (Thurs). |
Fig C: Eurozone consumer confidence (index)
Key UK macro data & events
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Events: |
Speeches by the Bank of England’s Pill at the Barclays briefing (Tues, 9am), Breeden in at the FT climate and impact event (Thurs, 11:50am), Dhingra (Thurs, 12pm) and Pill in Vienna (Thurs, 1:30pm). |
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Monday: |
Rightmove house prices (May, 12:01am). |
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Tuesday: |
N/A |
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Wednesday: |
Headline & core CPI, RPI & PPI (Apr, 7am); Land Registry house price index (Apr, 9:30am). |
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Thursday: |
Public sector finances (Apr, 7am); S&P manufacturing & service sector PMIs (May first estimates, 9:30am); CBI industrial trends survey (May, 11am). |
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Friday: |
Gfk consumer confidence (May, 12:01am); Retail sales (Apr, 7am). |
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Key earnings: |
Vodaphone (Tues); SSE (Wed); BT (Thurs). |
Fig D: UK S&P manufacturing & service sector PMIs
Key Asia-Pacific macro data & events
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Events: |
PBOC policy decision (Tues, 2am); RBA policy decision (Tues, 5:30am); speech by the BOJ’s Noguchi in Miyazaki (Thurs, 2:30am); speech by the RBA’s Hauser (Thurs, 9:30am). |
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Monday: |
Chinese new & used home prices (Apr, 2:30am); Chinese activity data (industrial production, retail sales, fixed asset, property investment & unemployment rate – Apr, 3am); Japanese Tertiary industry index (Mar, 5:30am). |
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Tuesday: |
N/A |
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Wednesday: |
Japanese imports/exports, & trade balance (Apr, 12:50am); Australian Westpac leading index (Apr, 1:30am). |
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Thursday: |
Australian S&P manufacturing & services sector PMIs (May first estimates, 12am); Japanese machinery orders (Mar, 12:50am); Japanese Jibun Bank manufacturing & services sector PMIs (May first estimate, 1:30am); Japanese machine tool orders (April final estimate, 7am). |
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Friday: |
Japanese headline & core CPI (Apr, 12:30am). |
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Key earnings: |
Tokio Marine Holdings (Tues). |
Fig E: Japanese Jibun Bank manufacturing & services sector PMIs
This week:
Longview on Friday, 16th May 2025:
“To Retest or Not to Retest?'”
Recommended Global Macro Trade 15th May 2025:
“Play Lower US Rates & Treasury Yields”
Global Macro Report, 14th May 2025:
“Fed’s Dual Mandate (Inflation & Growth): Which Part Matters the Most? a.k.a More Cuts Need to be Priced into the Curve”
Prior week:
Longview on Friday, 9th May 2025:
“Global Macro - In the 'Foothills of Sunlit Uplands'”
Commodity Fundamentals Report No. 187, 8th May 2025:
“OIL: How Low Does It Go? a.k.a Politics, Price Wars, & The (Coming) Supply Response”