US stocks extended Thursday’s losses as the S&P500 closed 0.85% lower on Friday night.
There was heavier selling in the tech sector, as Apple dipped by 4.1% following reports of a slowdown in global demand for mobile phones.
And falls in stocks were accompanied by another bond selloff, as US 10-year bond yields climbed five basis points to 2.96% — the highest level since January 2014.
Shorter-term 2-year bond yields also climbed, with markets now increasingly pricing in the prospect of four rate hikes by the US Fed this year.
The sharp rise in oil prices has also raised the prospect of higher inflation, and both brent crude and WTI oil closed just off their multi-year highs reached earlier in the week.
In addition, reports emerged over the weekend of a rebel attack in Libya which could cause further supply disruptions.
The USD had a strong session on Friday night, as the US dollar index closed above 90 for the first time in two weeks. That broader strength weighed on the Aussie, which closed the week at 0.7672 US cents.
Domestically this week it’s all about inflation, with quarterly CPI figures scheduled for Tuesday at 11:30am AEDT.
It’s a quieter week of key data abroad, with the first major event not until Thursday when the European Central Bank makes its interest rate announcement.
Tuesday’s inflation data is expected to show that underlying inflationary pressures in Australia remain weak.
The median forecast among 20 economists surveyed by Bloomberg is for underlying inflation to rise by 0.5% in the March quarter.
A quarterly gain of 0.5% will leave the annual rate of growth at 1.85% — still below the RBA’s 2-3% target range. Headline inflation is forecast to come in at 2%.
Also on Tuesday at 8:00am AEDT, RBA Assistant Governor Christopher Kent will deliver a speech titled “The Limits of Interest-only Lending”.
It may get some attention, given the recent downturn in Australia’s housing market in the wake interest-only lending caps introduced last April.
Also from the ABS this week, there’s Australia’s import/export trade price index for March on Thursday (11:30am AEDT), along with quarterly producer price inflation (PPI) data (Friday, 11:30am AEDT).
Composite PMI data (manufacturing and services) in the US on Monday night will provide an update on the growth outlook for the world’s biggest economy.
Recent analysis from Deutsche Bank showed the US is the only G10 economy still delivering positive data surprises on global growth.
Then it’s a relatively quiet week abroad until the ECB’s rates announcement on Thursday night.
With no changes expected to the bank’s rate settings, the focus will be on any changes to the bank’s 2018 in the wake of a recent downturn in Eurozone economic data.
Then on Friday in Asian trade the Bank of Japan will make its own interest rate announcement.
No changes are expected to the BoJ’s extremely accommodative interest rate settings amid an environment of low inflation and even slower wage growth.
And on Friday after Asian markets close there’s GDP readings for both the US and Great Britain.
CBA analysts expect UK GDP to rise at a sluggish 1.4% for Q1, dragged lower by poor weather in March.
And the median forecast on Bloomberg is for the first reading of Q1 GDP in the US to show growth of 2% — down from 2.9% in December.
Have a great week.
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