Next week, focus will be on inflation reports from the US and China, alongside the FOMC minutes and the RBNZ rate decision. Key reports include UK GDP and Japanese cash earnings, while Q1 25 earnings season begins.
Japan’s cash earnings report will be scrutinised after real wages fell 1.8% year-on-year in January, with inflation at 4.7%. The largest labour union secured an average 5.46% pay hike this year.
Fomc Minutes And Fed Expectations
The FOMC minutes will reflect on the Fed’s expectations of two rate reductions in 2025 after keeping rates unchanged at its March meeting. The central bank anticipates higher unemployment and elevated inflation, with a planned slowdown in balance sheet runoff.
The RBNZ is expected to cut rates by 25bps to 3.50%, coinciding with a change in leadership following Governor Orr’s resignation. Previous meetings indicate a further easing path if economic conditions allow.
The RBI is forecast to cut rates, potentially by 25bps to 6.00%. The current CPI growth of 3.61% presents an opportunity for further policy easing.
China’s inflation data will be closely monitored amid sluggish demand and US tariffications, with Goldman Sachs estimating a GDP growth drag of 1.7%.
US CPI is expected to rise 0.2% month-on-month, while analysts caution the influence of announced tariffs on future price growth. Norwegian inflation reports will be vital for the Norges Bank’s policy trajectory.
UK GDP is projected to improve to +0.1% m/m for February following a contraction in January. Analysis suggests manufacturing saw a temporary boost ahead of US tariffs.
The Imminent Q1 Earnings Season
The Q1 25 earnings season will commence with expected annual growth for the S&P 500 at 7.3%. However, downward revisions lead to cautious guidance, amidst economic uncertainty due to global tariff policies.
Looking beyond the scheduled releases, what we’re seeing is a deeply nuanced reaction brewing in the options and rates markets. The Fed’s March minutes may appear benign at first glance — rates held, gradual balance sheet tightening, and two pencilled-in cuts for next year. But tucked into the text is an acknowledgment of worsening unemployment projections and inflation that remains above target. That signals discomfort, not complacency. Traders with exposure to front-end rate futures might consider recalibrating interest rate curve trades. The pricing-in of a slower runoff could subtly steepen the back end, but limited clarity on the Fed’s pace risks sudden repricings. Volatility on CPI days should not be underestimated.
Over in New Zealand, the projected 25bps rate cut builds upon earlier dovish remarks and a leg lower in growth and inflation momentum. Leadership shifts at the central bank often bring not only headlines but behavioural shifts among policymakers. Should post-decision commentary confirm room for more accommodation, 2-year swap rates will likely lower further. With past rate hold decisions already baked into pricing, there’s room for receiver bias across the curve.
India adds another angle. The consumer inflation figure sliding to 3.61% opens the door wide for a cut to 6.00%. While this alone isn’t market-moving, further easing would speak to a broader pattern developing among APAC central banks leaning dovish amid mixed demand signals from China. It’s here where positioning becomes delicate. Chinese inflation, or the lack of it, continues to present a dilemma. A recovery is not confirming in the headline CPI figures, and PPI remains negative. Soft domestic demand and the drag from new tariffs, which Goldman quantifies neatly at 1.7% on GDP, suggest more support will be necessary. The renminbi, while not under acute pressure now, could become more vulnerable should capital outflows pick up. And if volatility rises, we may start to see premium creep into FX options, particularly on USDCNH topside structures.
In Europe, attention turns to the British economy, where the monthly GDP reading is set to rise modestly after a grim stretch earlier this year. February’s estimated +0.1% growth offers little comfort by itself. Still, sectors that benefit briefly from pre-tariff demand surges — manufacturing, in this case — may give traders clues as to company-level deviations ahead of earnings. If additional labour data and industrial output figures follow suit, that could prompt upside repricing in short sterling contracts, though only if paired with guidance from the Bank of England hinting at rate stabilisation.
Norwegian inflation figures bear watching this week as well. Their influence extends beyond domestic policy, since the Norges Bank has leaned on forward guidance rather than rate changes to shape markets. If consumer prices disappoint, we can expect the stable NOK narrative to be tested. Short-dated vol in EUR/NOK and USD/NOK pairs could see increased interest in repricing events.
Meanwhile, earnings season is arriving with less fanfare than usual. Consensus for the S&P 500 shows a growth figure above 7%, but that’s before revisions. Lowered forecasts indicate caution is widespread. With higher raw material costs and shifting demand patterns due to cross-border tariffs, margins are in play. Equity vol remains suppressed for now, but options open interest is climbing, particularly in high-beta names. That signals preparations for performance gaps — up or down.
Labor costs in Japan — which continue to fall in real terms — deserve attention too. If these figures fail to recover meaningfully, we should expect conditions for households to remain challenging, despite headline wage increases from trade union negotiations. There’s a disconnect between what’s promised and what lands in wallets, and this plays directly into BOJ policy debates. Interest rate differentials remain firmly USD/JPY positive, which helps options strategies favouring carry trades in the near term.
Every report next week lands contextually. It’s not only about the numbers themselves, but what they shift in terms of expectations. Price reactions will likely be far from linear. Reading the tone of central banks and watching how vol surfaces respond around decision dates will be key markers for strategy calls.
We expect markets to start rationing optimism more narrowly. Focus is tightening. Where liquidity runs deepest, movement is hard-earned. But soft data in the wrong place — or ill-timed central bank backtracking — could steer pricing hard and fast.
