Podcast: US CPI inflation data and UK employment data

Created: 11th March 2024

What happened last week.

(A forex, index, and commodity market review)

US Daylight savings. US Clocks have gone forward 1 hour. Markets will open and close 1 hour earlier in the UK and Europe, until clocks are adjusted in these regions on 31st March.

The key US Non-farm employment data was weaker than consensus as the previous month’s blowout number was revised sharply lower. Fed watchers also note that Jay Powell acknowledges the Federal Reserve regards policy is restrictive and that the first rate cut will happen when FOMC is confident inflation is heading to target.

Weekly change (amount change and percentage change on the week)

FTSE -37 -0.48%

DAX Unchanged

DOW -306 -0.78%

S&P -7 -0.14%

NASDQ -256 -1.40%

NIKKEI -1,004 -2.50%

Hang Seng -256 -1.54%

Last week, equity markets struggled as data painted a weakening in services in the world’s two largest economies whilst the employment picture in the US became more uncertain.


The anticipated US Non-farm employment data looked stronger than expected, as February’s reading came in at 275K new jobs, ahead of the 198K consensus. However, January’s blowout reading of 353K new jobs was revised sharply lower.

When the data was released in early February there were a lot questions about the BLS data. And so it transpires that the initial data was very wide of the mark as the Bureau of Labour Statistics sharply lowered its reading by 124K jobs to 229K. The Bureau also revised Decembers data down by 43K. So taking into account the Feb reading and revision to January and December’s data, the payroll numbers were nearly 93K less than consensus.

Equities fell on the news as traders and investors had to reassess their growth forecasts. Despite the weaker growth implied by the jobs data, there was little movement in the forward rates with the prospect of the first rate cut on 12th June still hovering around the 73.5% mark, just a slight increase compared to what forward rates were implying before the jobs numbers.

US equities had made new high last Thursday but the uncertainty about the jobs number and implication for growth numbers caused all three main indices to lose ground.


The ECB updated the markets with its policy decision and forecasts about growth and inflation. The Eurozone lags the US by some margin but the ECB is still mindful of the outlook for inflation in the block.

The statement from the ECB following the unchanged rates announcement, said that the bank lowered its annual inflation forecast whilst Christine Lagarde suggested market pricing for a June rate cut was coming into line with policymakers’ outlook.

The ECB updated its forecasts from December 2023 and now expects inflation to average 2.3% in 2024, down from 2.7%, with the target of 2% being met in 2025.


The ECB revised its growth forecast to 0.6% in 2024 from 0.8%, with growth accelerating to 1.5% in 2026.

In the UK, the UK Government released their Spring Budget last Wednesday with a number of measures designed to stimulate the jobs market and benefit those in work. Despite the second 2p cut in employers national insurance, economists pointed out that the measures, whilst beneficial, would be countered by the freezing of tax bands which brings more and more workers into higher tax bands – known as fiscal drag. The FTSE100 was down slightly on the week but the FTSE250, much more representative of UK Plc, rallied 1.7% from Tuesday close before the budget. Sterling’s strength reflects the better economic performance recently and the political stability that PM Sunak has brought and the confidence this provides to the UK’s outlook.

EURUSD +0.97 +0.90%

GBPUSD +2.01 +1.59%

USDJPY -3.00 -2.00%

Seasonal factors no longer favour the US Dollar as all majors gained versus the US Dollar last week. Sterling continued to outperform as it touched its highest level versus the US Dollar since late July last year as investors focus on improving business surveys which is predictors of future economic activity. Sterling’s strength is not just against the weakening US Dollar; against the Euro, Sterling is close to hitting a 19 month high.

The Japanese yen was also strong, as the US Dollar fell from 150 yen level to 147, as traders speculate about the Bank of Japan’s next policy announcement on 19th March.

Gold +94 +4.51%

UK OIL -1.56 -1.92%

US OIL -1.90 -2.40%

The rally in Gold accelerated again last week on the back of sharp gains in crypto assets and further central bank and speculative buying as the precious metal hit another all time high – up 4.5% on the week. The fall in the US Dollar also played its part as Gold notched up its third weekly gain in a row and its biggest weekly gain since the second week in October last year.

Oil continues to react to the ebb and flow of news in the Middle East conflict between Israel and Hamas. The US Administration’s move to construct a pier and bring in much need aid, food and supplies by ship to Gaza could help allay fears of a flare up in other regions in the Middle East where Hamas has support.


Data and events in the coming week

(What traders need to look out for in the week ahead)

A particularly quiet week on the data and events this week ahead of a very busy calendar next week with 4 major central bank policy announcements – more on that next Monday. Remember US Daylight savings clock changes! US inflation data on Tuesday the most important release this week.


No major data releases today


UK Employment report. Claimant count – actual data has been better than consensus for thee months. Average Earnings Index 3m/y The employment picture is easing slightly with the likelihood that the UK is no longer in a recession. GBP sensitive.

US CPI Inflation data. Inflation was stronger than expected last month so investors will be keen to see that trend reversed. Headline inflation is expected at 3.1% annualised and 0.4% monthly. Core inflation which excludes food and energy components, expected at +0.3% monthly and for an annualised rate of 3.7% (last at 3.9%) which, if hit, would be the lowest rate since May 2021. USD and US and global assets sensitive.


UK GDP – Monthly reading. Markets have become used to revisions of this data. The monthly figure is for January and will contribute to the data set that makes up Q1 GDP when that is calculated. +0.2% expected as its likely that UK emerges from its technical recession in Q3 / Q4. No great impact expected.


US Core PPI. Producer price Index. The costs of goods and services going into production. A precursor to inflation / disinflation. Expected at +0.2% - Little pressure expected on inflation.

US Core retails sales. Another “core” reading as statisticians attempt to present reliable data that’s not overwhelmed by less important data. Core retail sales excludes transportation items such as cars which account for 20% of retail sales but can be very volatile. Expect 0.5% following last months weaker than expected -0.6% reading. USD and US assets sensitive.


US Empire State Manufacturing Index. Manufacturing activity in NY State. Expected at minus 7.6 . Still in the doldrums and has been late 2021.

US Prelim University of Michigan Consumer sentiment. A good leading indicator of future economic activity although the previous months

final reading had a significant downward revision. 76.9% instead of 79.6% - almost a typo! This month expected at 77.3% - USD sensitive.

Russia Another complete mockery of a democratic process. Iran last week and Russia this week, where any candidate that receives the slightest bit of support is barred from standing. A spectacle that demonstrates how lucky we are in the west.