Key Events This Week: PMIs, Productivity And Consumer Sentiment - Conservative Angle

As has become customary for Monday, we have seen a dramatic surge in risk assets (3rd Monday in a row) on what at least superficially appears to be de-escalation after Trump announced strikes against Iran's power plant would be delayed by 5 days as a result of talks with Iran, talks which at least Iran's domestic news sources have so far denied. And the market lurches from headline to headline, it feels somewhat trivial to focus on the week ahead data calendar, but there will nevertheless be interest in the global flash PMIs for March, due tomorrow. As DB's Jim Reid notes, these surveys cover the period through roughly the end of last week and should therefore be heavily influenced by developments in the conflict. Elsewhere, inflation indicators are due in the UK, Japan and Australia, although these will now be quite backward looking. The German IFO survey on Wednesday may provide another timely read on sentiment, and Lagarde's speech the same day will also be closely watched. The week concludes with the final March reading of the University of Michigan US consumer sentiment survey, which incorporates an additional couple of weeks of responses from the initial reading. DB's economists expect a modest downward revision to 55.0 from the preliminary 55.5 as more respondents reflect heightened geopolitical uncertainty related to Iran. More important for policymakers, however, will be the inflation expectations components. Both one year and five to ten year expectations have historically tracked energy prices closely, making them particularly relevant in the current environment. Overall the data calendar is light in the US, and even if it were busier it would likely pale in significance relative to events in the Middle East. On the policy front, scheduled Fed appearances are limited, with only three officials due to speak. The first comes from Vice Chair Jefferson, who is set to deliver an outlook speech on Thursday. He is likely to broadly echo the themes laid out by Chair Powell at the post meeting press conference, where Powell placed greater emphasis on inflation dynamics and the outlook than on potential labor market weakness, giving the discussion a distinctly hawkish tone. Inflation, rather than employment, clearly remains the Fed's primary concern at this stage of the cycle. Any divergence by Jefferson from Powell's messaging would more likely be aimed at tempering expectations of imminent tightening rather than endorsing them, particularly given the sharp repricing from roughly 62bps of cuts before the strikes on Iran to around 7bps of hikes this morning (although that number has also reversed after this morning's newsflow). The same logic applies to remarks expected on Friday from San Francisco Fed President Daly and Philadelphia Fed President Paulson, both of whom are non voters this year and are also scheduled to deliver outlook speeches. In markets where incoming data is increasingly backward looking, there is limited value in dwelling on the remainder of the week ahead calendar, which is set out day by day at the end as usual. Courtesy of DB, here is a day-by-day calendar of events Finally, looking at just the US, Goldman writes that the key economic data releases this week are the productivity and costs report on Tuesday and the University of Michigan report on Friday. There are several speaking engagements by Fed officials this week, including events with Governors Miran, Barr, and Cook, and Vice Chair Jefferson.