Take five: a looming workforce crisis?
1 / BONUS TIME PAYMENTS
How fast is the recovery in the United States? Friday’s monthly US employment report will fuel the debate.
In April, job growth in the United States unexpectedly slowed, possibly due to labor and raw material shortages. The non-farm payroll added just 266,000 jobs over forecast for over 3 1/2 times more.
Optimism about jobs offset concerns about rising inflation and dwindling government financial support, pushing US consumer confidence in May to a 14-month high.
For May jobs, a Reuters poll predicts an increase of 621,000. Strong data could again raise fears of an earlier-than-expected release of the Fed’s stimulus.
-Hiring in the US slows as companies scramble to find workers and raw materials
2 / PRICE MONITORING
Tuesday’s flash inflation in the eurozone will certainly attract attention as the next European Central Bank meeting approaches.
Inflation in the bloc is approaching its 2% target – the fastest in years – thanks to higher spending and base effects resulting from the fall in oil prices in 2020. Strong data could spark enthusiasm or fear that a new era of inflation is looming.
Not so fast, others say. ECB chief economist Philip Lane, for his part, pushed against the narrative of returning inflation, stressing that labor markets will take years to return to pre-crisis levels and that stimulus are still needed to secure recovery.
The data could pave the way for a lively ECB meeting in June.
– Too early for the ECB to reduce its emergency bond purchases: Panetta
3 / THE QUESTION OF OPEC AND IRAN
OPEC and its allies, the OPEC + grouping, are expected to stick to the gradual easing of oil supply brakes at their meeting on Tuesday, placing hopes on a strong recovery in demand.
Since OPEC + decided to cut cuts to 2.1 million barrels per day in April, oil has extended its 2021 rally and is currently up more than 30% and is approaching $ 70 a barrel. .
One of the factors limiting the rise in oil prices is the prospect of higher Iranian production if its nuclear deal with world powers is revived. If a deal is struck, Iran could add up to 2 million bpd to its supplies.
-Uncertain about Iranian oil, OPEC + should stick to its policy
4 / POLICY BELOW
The Reserve Bank of Australia is meeting on Tuesday and is focusing on whether it will provide bellicose clues, given a strong economic rebound and its peers shift to a slower stimulus.
Few people expect Australia to follow its neighbor, New Zealand, which has signaled a potential rate hike in 2022. But investors are looking for clues to the RBA’s asset buying plans ahead of its July meeting, when it must decide to expand its quantitative easing program.
The advantages of Australia? Relatively low workload for COVID-19 and rising commodity prices. The Chinese yuan at its three-year high and Beijing’s signs of comfort with the exchange rate also bode well for commodity exports. The risk? A weaker Australian dollar against the yuan, which could lead to higher inflation.
– Australian bank will keep its cash rate at 0.1% until mid-2023
5 / YUAN ON A WEAPON
The Chinese yuan is at its highest since 2018, but the People’s Bank of China does not appear to be hampered by recent gains. This leads markets to guess how policymakers in the world’s second-largest economy plan to handle the economic recovery, commodity price gains and inflationary pressures.
Friday’s official guidance rate – the highest since May 2018 and located above the psychologically important level of 6.4 per dollar – appeared to be tacit acceptance of a stronger yuan.
But officials have also raised their voices in recent days over pledges to crack down on foreign exchange manipulation, warning on Friday against one-way bets on the yuan. They reiterated, however, that there was no change in the country’s monetary policy.
-Chinese regulators pledge to crack down on yuan exchange manipulation
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