Following last week, Powell commented on Wednesday at Stanford about the higher-than-expected job numbers. In my view, this has opened the possibility that a rate cut may not be assured in June, as the fight against inflation has not completely settled yet. We are still continuing the stance of 'wait and watch' since the data is not yet favorable enough to justify rate cuts.

The job numbers from Friday, the JOLTS, came out with 8.75 million openings, and non-farm payroll increased from 270,000 (revised for February) to 303,000 for March, beating the estimates of 200,000. The unemployment rate has slightly dropped to 3.8% from 3.9% during March 2024. Adding in my opinion, the job numbers and manufacturing PMI data from last week have decreased the possibility of rate cuts in June and pushed the rate cute further down into this year.

Looking ahead this week in the US, we have the inflation data and minutes of FOMC coming out on Wednesday (April 10th). The current expectation for inflation is a 0.3% month-on-month increase and 3.4% on a yearly basis, while for core inflation, the expectations remain the same for month-on-month and 3.7% for the annual basis. A higher inflation reading could significantly reduce the possibility of a rate cut in June and the reading in line with expectation could continue the state indecisiveness till April's job and inflation numbers. This is followed by the Purchase Price Index on Thursday (Apr 11th).

In the Indian economy over the last week, the RBI has retained the repo rate at 6.5%. Loans and deposits have grown at 20.2% and 13.5%, respectively. Looking ahead to this week, we have our inflation figures for CPI coming out on Friday (Apr 12th) with expectations of a 0.2% monthly increase and a 5% year-on-year basis.

Date : 07th Apr '24; Source - Trading Economics, Reuters, Forbes

LR