Markets enter the week facing a decisive shift – from pricing geopolitical risks to measuring their economic impact – with… The US CPI is set to test the course of the Federal Reserve’s policy. With Brent crude holding above $100 for most of March following the escalation in the Iranian conflict, upcoming data will serve as an indicator A litmus test for the effects of second-round inflation.
The key question is no longer whether energy prices are rising, but whether these costs are feeding into prices, wages and broader policy expectations, which are widening enough to force the Fed to raise interest rates later in the year.
This represents a shift from“speculation” to “quantification”. Markets have already repriced stagflation risks, but have not yet fully priced in a sustainable inflation regime due to supply disruptions. This week’s releases will determine whether the repricing process will accelerate or stop.
High risk events:
US CPI and ISM: From energy shock to core inflation
In the US, focus is on Friday’s CPI, along with the Services PMI and the FOMC minutes from earlier in the week. The CPI is the deciding event. Markets will look beyond headline inflation Core components and servicesEvidence on the transmission of energy costs confirms that inflation is expanding. A simultaneous improvement in both would indicate that transportation and input cost pressures are feeding into final consumer prices – leading to a solidification Stagflation novel Effectively removing near-term Fed easing from the table.
The ISM Services PMI will provide an early read on inflation dynamics. the Prices paid sub-index This will be key to measuring cost pressures, while new orders will indicate whether demand is holding up or starting to collapse as prices rise. Together, these components will provide further signals about whether the economy is absorbing or resisting the energy shock.
FOMC Minutes vs. CPI: Sentiment vs. Reality
Wednesday’s FOMC minutes come before the CPI, creating a crucial sequential dynamic. The minutes reflect the thinking of policymakers at the March 17-18 meeting and are, in effect, a snapshot of early reactions to the oil shock. Although the political statement at the time was a matter of “wait and see,” the minutes will reveal the intensity of the internal debate over the Iran war and the subsequent oil shock.
- The dovish view: Look for phrases like “Participants noted a tendency to consider supply-side shocks” or “Energy price increases are viewed as likely to be temporary.” This would indicate that the Fed is staying the course on eventual interest rate cuts.
- Falcon transformation: Pay attention to concerns about “second-round effects” or “inflation expectations becoming unstable.” If officials express concern that higher energy prices will impact services and wages, that suggests they may keep interest rates steady for the rest of 2026 — or even discuss raising them.
If the minutes show increasing concern about inflation, and the CPI then confirms a broad-based recovery, markets may be forced to aggressively reprice the Fed’s course. In this scenario, Higher long-term expectations will be sharply strengthenedWhich could lead to a strong rise in the dollar along with renewed upward pressure on yields.
Canada Jobs: Energy Boom or Degrowth?
Canada’s employment report on Friday will test whether higher energy prices are supporting or undermining the domestic economy. After recent job losses earlier in 2026, the key question is whether the oil-driven increase fuels employment, especially in resource sectors.
However, the composition is as important as the title. Concentrated gains in energy extraction combined with losses in manufacturing would strengthen the Bank of Canada’s position Policy dilemma– Inflation rose thanks to energy, but growth was constrained elsewhere. This keeps the Bank of Canada on the sidelines, with policy potentially on hold unless there is a broad recovery in the labor market.
Silent motor:
RBNZ Decision: Tight-hold signals shift in risk
The Reserve Bank of New Zealand is expected to leave interest rates unchanged at 2.25% on Wednesday, but the tone will be closely monitored. Recent guidance from Governor Anna Breyman signals a shift toward a Falcons pauseRecognizing that while initial energy shocks can be overlooked, second-round effects cannot.
Of particular interest is inflation expectations rising towards 4.1% for mid-2026, indicating early signs of… Uninstall. This has already led markets to price in the possibility of interest rate hikes later in the year, even as growth remains weak in the near term.
Highlights of this week:
| day | currency | It happened | importance |
| Monday (April 6) | US dollars | Purchasing Managers’ Index (ISM) for services | High |
| Wednesday (April 8) | New Zealand dollar | Reserve Bank of New Zealand interest rate decision | High |
| Wednesday (April 8) | euro | Retail sales in the euro area | Mediation |
| Wednesday (April 8) | US dollars | Minutes of the Federal Open Market Committee meeting | High |
| Friday (April 10) | US dollars | US Consumer Price Index (CPI) | Very important |
| Friday (April 10) | Canadian | Employment change/rate | High |
