Friday will see the release of the March US jobs report, which will be closely watched as it is the last monthly employment report before the next Federal Reserve meeting in May. This week, which promises to be a busy week on the economic data calendar, will see an update on inflation. Events in Ukraine and oil prices will also continue to shape market sentiment as we approach the end of the first quarter. Here’s what you need to know at the start of the week.

1. Nonfarm payrolls

Friday’s March U.S. nonfarm payrolls report could help the market understand whether the Fed’s roadmap for rate hikes is too tight or not tight enough.

Economists expect the U.S. economy to add 475,000 jobs after adding 678,000 in February. Average hourly earnings are projected to rise 5.5% year-over-year and the unemployment rate is expected to fall to 3.7%.

Signs of continued strength in the labor market underscored the need for a tighter rate hike as the Fed tries to curb fast-rising inflation.

The Fed raised the rate by a quarter percentage point on March 16, but since then, Fed Chairman Jerome Powell has indicated that the central bank is willing to raise the rate by another half-point if warranted, despite concerns that doing so could trigger an economic slowdown.

2. Inflation data

Ahead of the U.S. jobs report on Thursday, personal income and spending data for February will be released. The report contains data on personal consumption expenditures, a measure of inflation that is closely watched by the Fed.

Economists expect the core PCE price index to rise 5.5% year-over-year, remaining well above the Fed’s 2% inflation target.

Other updates on the economic calendar will include consumer confidence, job openings, private sector hiring, jobless claims and ISM manufacturing PMI.

In addition, New York FRB Governor John Williams, Philadelphia FRB Governor Patrick Harker, Atlanta FRB Governor Rafael Bostic, and Richmond FRB Governor Thomas Barkin are scheduled to speak during the week.

3. Oil prices

Oil prices posted their first weekly gain in 3 weeks, with Brent up over 11.5% and WTI up 8.8%.

Oil prices have risen 50% since the beginning of the year amid sanctions against major oil supplier Russia in response to the special operation in Ukraine.

Rising oil prices have fueled inflation expectations, burying hopes by global central banks that inflation, spurred by pandemic-era stimulus packages, would be temporary.

Jerome Powell said last Monday that the U.S. economy is clearly better able to withstand an oil shock now than it was in the 1970s. The U.S. is the world’s largest oil producer. But that didn’t stop Powell from making a sharper statement on inflation (see above) than he did in the press conference immediately following the Fed’s rate hike a few days earlier.

4. Stock Market

Wall Street’s three major indexes ended last week higher, with the Nasdaq and S&P 500 up 2% and 1.8%, respectively, and the Dow up 0.3%.

U.S. Treasury yields jumped on Friday; with benchmark 10-year bonds rising to near 3-year highs as the market grappled with high inflation and the fact that the Federal Reserve could easily trigger a downturn with a sharp tightening of monetary policy.

“The stock market is evaluating the conditions for a rate hike,” Keith Buchanan, a portfolio manager at Globalt Investments in Atlanta, told Reuters in an interview.

That’s causing bank stocks to rise faster than the rest of the market at the same time “increasing pressure on riskier elements of the market,” such as growth stocks, he said.

5. Eurozone Inflation

The Eurozone will release inflation data on Friday, and economists expect the Consumer Price Index (CPI) to hit a new record high of 6.5% amid a surge in energy prices.

The European Central Bank has indicated that there is no rush to raise the interest rate, but given the 2% inflation target, it is not surprising that some officials are calling for one or two rate hikes this year.

A strong inflation figure would bolster their arguments. But bond markets are also suggesting a rate hike is just around the corner, as they have priced in 5 hikes of 10 basis points each by year-end.

German 2-year bond yields rose 30 basis points in March, the biggest monthly increase since 2011. After years of negative yields amid ECB bond purchases to stimulate inflation, it is fast approaching 0%.