Deutsche Bank’s Jim Reid and team say markets are digesting a firm US payrolls report that reinforced views of a resilient labour market and persistent inflation risks. They highlight a dense United States (US) data calendar, led by April Consumer Price Index (CPI), Producer Price Index (PPI), retail sales and industrial production, which will shape expectations for the US Dollar (USD) and US yields over coming days.

US data and inflation in focus

"Before that, the new week arrives with markets still processing last Friday’s US payrolls report, which came in broadly firm and reinforced the view that labour market conditions remain resilient."

"While not strong enough to decisively alter the policy outlook, the release did little to ease concerns that underlying inflation pressures could persist, especially given still-solid wage dynamics."

"Against this backdrop, outside of the Iran War developments which will of course take centre stage, the coming week will remain centred on the US, with a dense run of data and policy developments."

"The focal point will be tomorrow’s April CPI report."

"Our economists expect headline inflation to rise by +0.58% month-on-month, moderating from March’s +0.9%, but still relatively firm."

"In contrast, the core measure is projected to accelerate to +0.39% MoM from +0.2%, suggesting underlying price pressures remain sticky even as energy-related effects fade."

"The YoY rates would move from 3.3% to 3.8% for the former and from 2.6% to 2.8% for the latter."

"Producer price data follows on Wednesday and then the remainder of the week shifts towards activity indicators."

"Our economists expect retail sales to decline by -0.3% MoM after March’s strong +1.7% increase, pointing to some payback in consumer spending."

"Meanwhile, industrial production is forecast to rise modestly by +0.2% MoM following a -0.5% drop previously, suggesting a tentative stabilisation in manufacturing output."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)