Reports that US officials would expand lending facilities to banks and confirmation of the acquisition of SVB's loans and deposits by First Citizens helped restore a sense of calm to banking stocks and improved risk sentiment last week. As the conversation moved from "which bank goes next?" to "what comes next?" it has allowed the market to return its focus to the macro data.

The week that was - highlights

1. In the US, the banking crisis saw the interest rate market flip from an expectation of rate hikes to rate cuts
2. Last week's economic data showed no apparent signs of concern over recent banking crisis news
3. The Conference Board, Consumer Confidence Index, beat expectations rising to 104.2 from 103.4 in February
4. In Australia, the key data released last week, retail sales and the monthly CPI indicator were softer than expected which may see the RBA sit on its hands when it meets on Tuesday.

Key dates for the week ahead

Australia + NZ

• Tuesday, 4th of April: RBA Board Meeting
  The interest rate market expects the RBA to keep interest rates on hold at 3.6%
  Some economists are still expecting a 25bp hike

• Wednesday, the 5th of April: RBA Governor Lowe Speech
  Held at the National Press Club

• Wednesday, the 5th of April: RBNZ Interest Rate Meeting
  The interest rate market sees one more hike priced into the market by July, taking the cash rate to 5.25% before rate cuts into year-end.

China

• Monday, 3rd of April: Caixin Manufacturing PMI
  The market is expecting a print of 51.5 in March from 51.6 in February

• Thursday, 6th of April: Caixin Services PMI
  The market is expecting a print of 55 in March, unchanged from February.

US

• Friday, 31st of March: Core PCE inflation
  The Fed's preferred measure of inflation is expected to stay stable at 4.7% YoY in February

• Tuesday, 4th of April at 1am AEDT (2pm GMT): ISM Manufacturing PMI
  The market is expecting a slight drop to 47.5 in March from 47.7 in February

• Wednesday, the 5th of April at 1am AEDT (2pm GMT): JOLTS Job Openings
  TBC

• Wednesday, the 5th of April; ADP Employment Change
  The market is expecting a rise of 205k in March, less than the 242k rise in February

• Thursday, the 6th of April at 1am AEDT (2pm GMT): ISM Non-Manufacturing
  The market is looking for a print of 54.6 in March from 55.1 in February

• Friday the 7th of April: Non-Farm Payrolls
  The market is looking for a gain of 240k in March compared to 311k in February
  The market expects the Unemployment Rate to remain stable at 3.6%.

Key events for the week ahead

US employment week

During the first two months of 2023, the US economy had created over 800k jobs which point to a very tight labour market and well above the 100k per month considered necessary to keep up with growth in the working-age population.

The week of April 3rd will see three measures of the labour market strength released. The ADP employment report on Wednesday (April 5), the JOLTS Job Openings Report on Thursday (April 6) and the big one, Non-Farm Payrolls on Friday night (April 7).

The market is looking for a rise of 240k jobs in March, following a gain of 311k in February. The unemployment rate is expected to remain stable at 3.6%.

April RBA Board Meeting

The Minutes from the RBA's March Board meeting noted that it would be appropriate to pause its rate hiking cycle "at some point" to assess the effects of prior rate hikes. As part of its considerations, it would closely watch incoming employment, inflation, business surveys and retail sales data.

The latest updates of those criteria showed:

• Employment data (released in mid-March) was stronger than expected

• Consumer confidence remains at GFC levels

• Business confidence is softening

• The Australian Composite PMI fell in March to 48.1 vs 50.6 in February

• Retail Sales are down 1.5% over the three months to February

• The Monthly CPI Indicator in February rose 6.8%, lower than the 7.4% rise in January and 8.4% below December's print.

• The data suggests inflation has peaked and turned lower.

As most of the data prints outline above were softer than expected, the interest rate market expects the RBA to keep interest rates on hold at 3.6% at Tuesday's Board Meeting, allowing time to assess the impact of its 350bp hike.

However, some economists still feel that inflation is too high and are looking for another 25bp rate hike.

The interest rate market has called the RBA rate hiking cycle much better than the forecasters and for this reason we believe the outcome for Tuesday's meeting will be a pause.

Economics calendar

All times shown in AEDT (UTC+11) unless otherwise stated.