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Two central banks in countries at opposite ends of the Pacific Ocean meet on Wednesday and could deliver the first half-point interest rate rises in any developed nation this cycle.

The U.S. Fed, expected to follow suit in May, gets March inflation data, while the ECB on Thursday will face pressure from its hawkish factions to start tightening policy.

And Europe has woken to the risk of a French election upset.

Here’s your week ahead in markets:

MADAME LA PRESIDENTE?

Marine Le Pen, leader of French far-right National Rally (Rassemblement National) party and candidate for the 2022 French presidential election, gestures during a political campaign rally in Perpignan, France, April 7.ALBERT GEA/Reuters

Far-right French politician Marine Le Pen, who sowed panic in the run up to 2017 presidential elections, is enjoying a resurgence in the opinion polls and markets are running scared.

With the first round of voting in presidential elections scheduled for Sunday, Le Pen is closing the gap on incumbent Emmanuel Macron.

Macron is still expected to win the presidency, but the possibility of an upset has sunk in. A Le Pen win would hamper European cohesion, while her big-spending, tax-cutting agenda would blow out France’s spending bill.

The premium investors demand to hold French debt versus Germany has risen, while shares in companies targeted by Le Pen for nationalization have fallen.

Unlike in 2017, Le Pen does not advocate ditching the euro. But a strong showing on Sunday will herald market turbulence before the April 24 decider -- and possibly after.

HAWKS OVER FRANKFURT

The European Central Bank (ECB) headquarters in Frankfurt, Germany on Dec. 30, 2021.WOLFGANG RATTAY/Reuters

With euro area inflation running at 7.5%, the European Central Bank’s meeting on Thursday will see the hawks out in force.

They have become increasingly vocal, while markets are now gunning for a July rate rise, having ramped up their bets since the March meeting.

ECB chief economist Philip Lane warns against reacting to short-term, energy-driven price surges. And the Ukraine war is taking a toll on the economy and consumer confidence.

The ECB knows well the price of making a policy mistake. It has raised rates in the past, only to make a speedy U-turn. Yet inflation shows no signs of peaking, let alone returning to the 2% target. The hawks’ clamor may get louder.

BIG GUNS, BIGGER RATE HIKES

A person walks past the Bank on Canada in Ottawa, Ont. on Tuesday, April 5.Spencer Colby/The Globe and Mail

Canada and New Zealand appear poised for their biggest interest rate hikes in 20 years, underscoring the worldwide scramble to contain inflation .

Both banks meet on Wednesday. Swaps price a 90%-plus chance of a 50 basis-point hike from the Reserve Bank of New Zealand and a better-than-80% likelihood of the Bank of Canada does the same.

With Canadian inflation seen above target until 2024, another 50 bps move may come in June. New Zealand delivered a 25 bps hike in February -- its third -- and flagged the possibility of bigger rises ahead.

These would be the most drastic G10 hikes this cycle. Until May, when the Federal Reserve is tipped to lift rates 50 bps.

PRICE WAR

Gasoline price is seen at a gas station in Rolling Meadows, Ill., Friday, April 1, 2022.Nam Y. Huh/The Associated Press

Minutes from the Fed’s March policy meeting showed meatier rate hikes and an aggressive balance sheet runoff are likely in coming months as the central bank battles inflation. .

All that puts a spotlight on Wednesday’s inflation data. February’s 7.9% print was the largest annual increase in 40 years. In March, consumer prices grew 8.3% year-on-year, economists polled by Reuters predict, as the Ukraine-Russia war sent commodity prices spiraling higher.

And as Americans dig deeper for rent, gasoline and food, wage gains are eroding -- inflation adjusted average hourly earnings fell 2.6% year-on-year in February. A chunky inflation print will bolster the case for more dramatic policy tightening.

BANKS TO THE TEST

The JPMorgan Chase & Co. World headquarters is pictured in New York City on April 17, 2019.JOHANNES EISELE/AFP/Getty Images

As rising bond yields, labor shortages and sky-high commodity prices buffet stock markets, first-quarter U.S. earnings will give investors a chance to gauge balance sheet resilience, cost pressures on companies and share buyback plans.

Overall, S&P 500 earnings growth is expected at 6.8% in the Jan-March quarter, versus the 53% bounceback seen a year ago from COVID-time doldrums, according to Refinitiv IBES.

Big banks kick off the season with JPMorgan reporting on Wednesday, followed a day later by Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley .

Bank shares have fared badly this year, with 11% losses , versus the S&P 500′s 6%

The six biggest lenders are projected to show a 35% decline in net income versus a year earlier. Investment bank revenues may have declined, especially after the Russian invasion of Ukraine, while some banks must make provisions for Russia-linked losses.

Finally, watch whether banks may curb share buybacks after seeing excess capital dented by Q1 losses on their bond holdings.

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