What to watch

It will be another busy data day.

• The European morning session will kick off with Spanish and Italian manufacturing PMI prints ahead of final prints of France, Germany, the Eurozone and the UK.
• The key event of the European morning session, however, will be Eurozone flash HICP. After the big upside surprises in Spain and Germany and prints closer to consensus from France and Italy, markets are probably pricing a modest upside surprise to the economic consensus of 6.7%Y/Y / core at 3.1%Y/Y.
• Focus will then turn to the US employment report. In terms of the data hierarchy, this print is now less significant than CPI for markets but still provides a big risk event. Markets now price 44bp for the Fed's May meeting (25bp fully priced with around a 75% probability of a 50bp hike). It would probably need a big surprise either way to see a significant shift to this pricing (i.e. more than 2-3bp).
• We will also receive the ISM manufacturing report this afternoon to conclude the data for a busy day, with focus mainly on the inflationary elements.
• In addition, the showdown between Putin and the EU over how payments for Russian gas are to be made is likely to continue to make headlines through the day.