Now that the American Rescue Plan has been passed, there is arguably going to be an even greater focus on inflation in the coming weeks and months – perfect timing, then, for a central bank-heavy week.
US: What will Fed have to say about inflation?
Though the Federal Reserve has already tried to brush off investors’ concerns over a surge in inflation once the US starts to open up and the economy begins to recover, that didn’t go down so well.
The markets were concerned by Jerome Powell’s lack of comment on what the central bank would do if bond yields continued to spike. With that in mind, what he says on Wednesday about the issue, alongside inflation and interest rates in general, is going to be of prime importance to the markets in light of the Biden administration’s stimulus success.
Any other comments about impending shifts in monetary policy will also be crucial to the health of the equity markets in the second half of the week, especially with the Dow Jones in all-time high territory.
The Fed will also be revealing its latest economic projections, which will make for interesting reading given they come days after the American Rescue Plan’s seal of approval, and well into the USA’s vaccination program.
Before Wednesday’s Fed main event, there’s the Empire State manufacturing index on Monday and some important retail sales readings on Tuesday, while the other side of the meeting you’ve got the Philly Fed manufacturing index on Thursday.
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UK: BoE to tame the Inflationary Tiger?
The Bank of England will be under a lot of the same pressures as the Fed this week when it comes to inflation and interest rates, especially after chief economist Andy Haldane’s hyperbolic talk of ‘taming’ the inflationary tiger.
In less headline-grabbing terms, BoE chief Andrew Bailey also expressed concern over a post-pandemic surge in inflation, so further comment on Thursday could be key to how the FTSE and pound end the week.
Data-wise it’s a quiet one in the UK, with only the Rightmove HPI on Monday and the public sector net borrowing number on Friday.
UK: Stocks to Watch
The corporate calendar is slightly busier. Tuesday sees final results from Antofagasta, Computacenter and Greggs, while Wednesday has an update from Dignity, and Thursday statements from Fevertree, National Express and Gym Group.
Eurozone: DAX in the hunt for fresh all-time high
With its own March central bank meeting out of the way, the Eurozone is more data-focused this week, including the ZEW economic sentiment and French inflation readings on Tuesday, an intriguing region-wide inflation number on Wednesday, and the trade balance figures on Thursday.
The DAX is also, of course, constantly in the hunt for a fresh all-time high at the moment, so it will be interesting to see how the German bourse moves as the week goes on.
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