Week Ahead: Xi to Trump, Fed minutes, French debate and US jobs

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The stage is set for the first official summit between two of the world’s most powerful leaders as China’s president Xi Jinping travels to Florida to meet his US counterpart Donald Trump next week.

Also competing for investors’ attention will be minutes from the Federal Reserve’s March 14-15 meeting, the second televised debate of the French presidential election and the release of the closely watched US jobs report.

Here is what to watch in the week ahead:

Xi, meet Trump

The leaders of the world’s first- and second-largest economies will meet at Mr Trump’s Florida retreat, Mar-a-Lago, April 6 and 7. According to the official White House release, the agenda will include “global, regional, and bilateral issues of mutual concern”.

That vague description belies the complex backdrop against which the two men will meet. Mr Trump pledged during the presidential campaign to label China a currency manipulator, and within weeks of his election prompted a formal protest from China after his phone call with Taiwan’s leader (Mr Trump has since said he will back the ‘One China’ policy to ease tensions.)

Mr Trump has warned that the meeting will include a “very difficult” discussion on trade as he ordered officials to find a solution to the US trade deficits with China and other major economies. People familiar with the preparations for Mr Xi’x first summit with Mr Trump have warned it is likely to be a low-key “working” encounter unlikely to yield a “grand bargain” on trade and investment disputes. Nevertheless, White House press secretary Sean Spicer said, don’t expect a “sit-around-and-play-patty-cake kind of conversation”.

The new US president’s meetings with world leaders since taking office in January have been met with a range of reactions, from his apparently friendly golf outing with Japan’s prime minister Shinzo Abe to a tense meeting with Germany’s chancellor Angela Merkel.

The tone Mr Xi and Mr Trump set for their next years together will be a focus of particular scrutiny, another reminder that “political events are now well and truly on the radar of developed market investors”, according to Fathom Consultants.

Fed minutes

Next week brings a peek behind the scenes from the Federal Reserve’s latest policy meeting in March.

The Fed raised a key short-term interest rate by 25 basis points at its March 14-15 meeting, after signalling that the US economy was on track to meet the central bank’s inflation and employment goals.

Fed officials have been hitting the public-speaking circuits in recent weeks to signal that the US central bank is envisioning at least one more rate rise this year, and possibly several more besides that. Investors will be checking the minutes due to be released on Wednesday for more insight into the coming months. Bank of America Merrill Lynch analysts said in a note that they reckon the minutes “are likely to sound more hawkish than the Fed’s statement.” Also on BofAML’s radar: “a discussion about plans for the balance sheet”, an emerging focus for Fed watchers.

French candidates debate

Eleven French presidential candidates will square off at 20:40 local time (14:40 EDT) in their second televised debate ahead of the first round of voting on April 23. Dutch voters recently rejected a populist candidate, and France is next on the list of critical European elections this year that have markets spooked that the continent may be taking a turn to the far right.

The French campaign has been one of the most closely watched in years — and the closest — particularly as observers wait to see whether the country may be swayed by the same forces that compelled voters in the UK to leave the EU and American voters to back the unconventional Mr Trump. Polls have suggested that, for the first time, neither France’s largest centre-right nor centre-left political movements will have a candidate in the decisive run-off in May, leaving the field wide open to the sort of surprises that may move markets.

US jobs report

Friday brings the latest check-up on the health of US employment, with the US labour department set to release monthly jobs data. Analysts are looking for total nonfarm payrolls to rise by 175,000 and the unemployment rate to tick down slightly to 4.7 per cent.

Fed officials have expressed general satisfaction in all their recent chatter with overall US employment trends, so Friday’s report will show whether their confidence is justified or if they may want to rethink the pace at which they move to raise rates. Ahead of the official jobs report, ADP set to release its own jobs report on Wednesday. The report is generally seen as a bellwether for the main event.

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