U.S. Jobs Report, Fed Chair Powell Speech, ECB Meeting, China NPC: Macro Week Ahead

Stock and the dollar are at risk as fear of global recession grows

• China’s annual NPC meeting is eyed with hope for more fiscal stimulus.
• A hamstrung ECB may boost the euro but also amplify recession fears.
• Key U.S. data and Fed Chair Powell’s speech may leave markets wanting.

Financial markets were in liquidation mode last week as signs of a slowdown in the U.S. economy fueled fear of global recession. Stocks fell alongside commodities as interest rates plunged across the yield curve, marking a sharply dovish shift in Federal Reserve policy bets. Haven-seeking capital flows broadly buoyed the U.S. dollar alongside bonds.

Against this backdrop, here are the key macro waypoints to consider in the days ahead.

China National People’s Congress (NPC)

China’s legislature will come together for its annual meeting this week to rubber-stamp the Chinese Communist Party (CCP) agenda for the year ahead. Clues about the government’s priorities for the next five-year plan—running from 2026 to 2030—will also interest investors.

The target for economic growth is expected to remain at 5% but markets will be keen to see if revising the fiscal deficit objective to call for more spending will set the stage for a stimulus to revive the anemic economy. So far, measures to ease credit conditions have been mostly disappointing.

The last three months of 2024 marked the seventh consecutive quarter when nominal growth of gross domestic product (GDP) lagged behind the rate of “real” output expansion, where inflation has been factored out. This implies economy-wide deflation, which speaks to near-total absence of demand.

European Central Bank (ECB) meeting

The European Central Bank is widely expected to deliver another 25-basis-point (bps) interest rate cut after the Governing Council meets this week. The move is fully priced into benchmark ESTR interest rate futures. On the whole, traders have discounted 81bps in rate cuts this year. That amounts to three full cuts and a 24% probability of a fourth one.

Eurozone economic growth has struggled to build momentum while inflation has been stubbornly sticky. Consumer price index (CPI) data put headline inflation at 2.4% year-on-year in February, a bit higher than the 2.3% expected by the markets. That may cap scope for further dovish repositioning, helping to underpin the euro.

More broadly, the absence of a more forceful stimulus push bodes ill for overall sentiment in that it hardly encourages a return to faster growth that might counterbalance weakness in China and stumbles in the U.S. The currency may well draw support from a hamstrung ECB, but fear of a global recession may become more acute as well.

U.S. economic data and Fed Chair speech

A flurry of high-profile macro news shaping U.S. economic growth expectations will probably take top billing. The service sector purchasing managers’ index (PMI) survey from the Institute of Supply Management (ISM) is first in focus, with traders eager to see if the numbers confirm the dispiriting weakness in the analog report from S&P Global.

The spotlight then turns to the closely watched monthly labor market update. The economy is expected to have added 133,000 jobs in February, marking the smallest rise in four months. The unemployment rate is expected to remain at 4%, matching the eight-month low recorded in January.

Finally, Fed Chair Jerome Powell is scheduled to discuss the economic outlook in a speech at the University of Chicago Booth School of Business 2025 U.S. Monetary Policy Forum. Fear about growth has triggered a sharp dovish turn in policy bets for this year and next. Traders will want to gauge whether the central bank chief is prepared to endorse it.

Analytics from Citigroup show U.S. economic data outcomes have increasingly deteriorated relative to baseline expectations, so much so that the tendency now favors disappointment. If this brings soft outcomes alongside familiar slow-and-steady incrementalism from Powell, bonds may go higher as stocks and the dollar weaken.

Ilya Spivak, tastylive head of global macro, has 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak

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