US: At 16:00 the number of vacancies according to JOLTS for March in the USA will be published. Consensus forecasts indicate a decline from 6.882 million to 6.825 million. Meeting the forecasts will reflect a balanced condition of the American labor market. The reading should not change expectations about the Fed’s interest rate path, as the market awaits the Friday release of the report, which includes employment changes in the non‑agricultural sector and the unemployment rate for April, which is more relevant and current.
US: At 16:00 we will learn the ISM services index for the USA in April. Consensus points to a stabilization at 54 points. Meeting this forecast would still indicate solid growth in this sector in the USA, although it faces uncertainty and rising costs.
Weak demand, rising costs and inflationary pressure in industry
The PMI for Polish industry in April rose slightly to 48.8 points from 48.7 points in March, beating the market consensus of 48.6 points. The improvement was however due to supply factors, while demand remained weak: new orders fell for the thirteenth month in a row, leading to a further, though moderate, decline in current production.
At the same time companies continued to reduce employment. Against this backdrop a strong rebuild of raw material inventories stood out, resulting from concerns about supply chain disruptions and the lengthening order fulfillment time, related to tensions in the Middle East.
The most important information from the data is, however, the sharp rise in production costs – the strongest since 2022 – which companies increasingly pass on to customers through finished product prices. Under such conditions firms’ 12‑month expectations worsened, although firms still expect production growth in the next 12 months. From a macroeconomic perspective the data fit into a scenario of increasing industrial production, accompanied by rising cost pressure.
Nevertheless, the supply shock now hits a much less vulnerable ground, namely a balanced economy, which allows maintaining expectations of stable NBP rates until the end of the year. However, the risk of needing rate hikes from the second half of the year has increased.
Wall Street falls and tensions around the Strait of Hormuz
The Monday session overseas ended with declines in equity indices, and concerns about further developments in the Middle East returned to the market.
Iran resumed attacks on the UAE after a month’s break and attacked American ships and merchant vessels; and the USA sank six Iranian assault boats.
The US President threatened that Iran would be destroyed if it attacks US forces assisting navigation through the Strait of Hormuz.
The escalation of tensions between the US and its allies and Iran and the risk of a long‑term energy impasse led to a decline in equity indices.
Russian President W. Putin decided to introduce a two‑day ceasefire in the war with Ukraine on May 8 and 9 for the World War II Victory Day holiday. Meanwhile, W. Zelensky announced a ceasefire from Tuesday to Wednesday.
The euro EURPLN rose to 4.262
Today's US data readings could be favorable for the dollar, which could steer the EURUSD rate toward 1.165 from the current 1.168.
The EURPLN rate could remain in the 4.252‑4.264 range.
The rise in oil prices weakened the base long‑term markets, which could affect the domestic market, although space for further bond growth seems limited.
Yesterday’s session was marked by a slight weakening of the zloty against the euro.
The EURPLN rate gradually rose to about 4.262 from about 4.245, but in the afternoon at the end of the day the zloty slightly rebounded.
Against the UK public holiday, changes in the domestic interest rate market were marginal, and activity was limited.
The 10‑year bond yield ended the day at about 5.78%. Data on a large NBP loss last year had limited impact on the market.
According to the NBP’s published financial report yesterday, the central bank’s result for last year was about 35.7 billion zloty.
Yesterday also appeared information that Poland is finalising agreements under the SAFE program, which will allow the acquisition of over 43 billion euros for defence investments.
The documents are to be sent to the European Commission this week, ahead of the contract signing deadline near the end of May.
The inflow of EU funds will positively affect the zloty, stabilising the balance of payments accounts.
Markets on hold: US‑Iran geopolitics and oil above 114 USD
In European equity markets changes were marginal with the London market closed on the public holiday.
Market participants analysed weekend events. D. Trump announced on Saturday that he would soon consider a new peace proposal for Iran, and then announced the release of ships from the Strait of Hormuz and threatened to use force if the process was disrupted.
It did not mean lifting the Strait blockade.
On Monday Iran reported attacking American warships, but the American side denied it. One of the tankers suffered.
US Secretary of State M. Rubio said yesterday that it is not excluded that the US will redirect part of the supplies for Ukraine if the United States priorities require it.
After earlier information about reducing US troops in Germany by 5,000 yesterday appeared information that they would be deployed in Poland.
Oil prices rose again to about 114$ per Brent barrel from about 107.5$. The dollar slightly gained against the euro to about 1.17 from about 1.173, which could be due to persistent risk aversion.
The euro did not help; a slightly better than forecast Sentix index reading. The dollar benefited from slightly better than expected industrial order data.
On base debt markets there was a rise in yields.
German bonds were weak at the opening and despite a temporary strengthening at the end of the day yields were near the opening (10‑year yield about 3.08%).
On the US market yields rose for most of the session, ending the day at about 4.44%.
