©Reuters
By Noreen Burke
Investing.com — It’s going to be a busy week in markets, albeit short, with US inflation data due and the start of Q1 earnings season. Inflation could hit new highs while bank profits are expected to fall. The ECB meets as it grapples with record-high eurozone inflation and economic uncertainty stemming from the war in Ukraine. Central bank meetings in Canada and New Zealand this week will also underscore global efforts to contain inflation. Here’s what you need to know to start your week.
- US CPI
February CPI inflation of 7.9% was the biggest annual rise in 40 years, and US data on Wednesday is expected to show it rising an annualized 8.5% in March as the war in Ukraine pushed commodity prices in soared.
A strong inflation gauge would strengthen the case for more aggressive rate hikes by the Federal Reserve and likely increase investor concerns that tighter monetary policy could weigh on the economy.
The Fed hiked rates by a quarter of a point in March, and last week’s minutes from that meeting suggested more substantial rate hikes and a balance sheet outflow are likely in the coming months as policymakers try to prevent a high inflation rates .
- economic data
Aside from the CPI numbers, the US will release data on Wednesday. The latest figures on and are due for release on Thursday along with dates on and .
The figures for and will be published on Friday, Good Friday.
Several Fed policymakers are also scheduled to speak later in the week.
Fed Governor Michelle, Fed Governor Christopher Waller, Atlanta Fed President Raphael and Chicago Fed President Charles will speak Monday.
Fed Governor Lael and Richmond Fed President Tom Barkin will speak at events on Tuesday, while Cleveland Fed President Loretta and Philadelphia Fed President Patrick Harker will speak on Thursday.
- bank receipts
Big US banks start first-quarter earnings season this week, and analysts expect financial sector earnings to fall year-on-year. Investment bank earnings are suffering in the wake of the Russian invasion of Ukraine, while some banks are accumulating for Russia-related losses.
(NYSE:), the largest US bank, will report on Wednesday, while earnings from (NYSE:), Morgan Stanley (NYSE:), (NYSE:) and (NYSE:) are due to follow on Thursday.
Bank stocks have performed poorly so far this year, down 11% from a 6% decline.
Bank executives are likely to be pressured as to whether the US economy can continue to grow amid the economic fallout from the war in Ukraine and a more aggressive US Federal Reserve.
- ECB
The ECB is due to make its final policy statement on Thursday and while euro-zone inflation is at a record high of 7.5%, in large part due to accelerating energy costs, policymakers are hesitating amid uncertainty about the impact of the War in Ukraine to tighten monetary policy on the economy of the bloc.
But with inflation still showing no signs of peaking, calls for rate hikes from the more hawkish members of the Governing Council are likely to become harder to ignore.
Market observers increasingly expect the ECB to raise interest rates this year.
In March, the central bank announced a reduction in its bond-buying stimulus program, which would expire in September. At the same time, it was said that a rate hike could follow “some time” after the end of the bond purchases.
- inflation fight
Central banks in Canada and New Zealand are both set to meet on Wednesday, with market watchers expecting officials at both banks to make their biggest rate hikes in 20 years amid rising global inflation.
According to data compiled by Reuters, markets are pricing in over a 90% chance of a rate hike of half a percentage point versus and over an 80% chance of the same.
With Canadian inflation above target through 2024, another half a percentage point hike could come in June. New Zealand implemented a quarter-point rate hike in February – its third – and hinted at the possibility of larger rate hikes.
–Reuters contributed to this report
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