Last week during the FED interest rate decision press-conference FED Chairman Powell upgraded expectations for GDP growth and inflation and cut estimates for the unemployment rate. FED sees a more robust economy and higher inflation but maintained the current pace of asset purchases and forecast no rate hikes through at least 2023.
Even if the markets participants believe that there will be no rate hikes through 2023, despite the outlook for higher inflation, at some point this year, QE tapering is inevitable. That is the dark cloud that will follow the stock market throughout this year and support higher bond yields.
In the week ahead, we are going to hear more talks from the FED Chairman Powell. Therefore, brace for some more volatilities in the markets on Monday, Tuesday, and in the aftermath on Wednesday.
It is interesting to notice that in the past, especially in the past year, bad economic news were good news for the stock markets, and the good economic news were also good news for the stock markets. The question is, are we going to see in the next 12 months shift away from that mindset and see the opposite, bad economic news is bad for the stock markets and good economic news is also bad for the stock markets because, in the first case it means that the higher valuations are not justified, in the latter it means QE tapering and potential for higher inflation.
Please review our latest Technical analysis for the currency market. JPY pairs are showing early signs for potential pullbacks, but in a week full of Central Banks member’s speeches, volatilities will be high!
On the economic front, the markets will watch the following economics data releases:
- Fed Chair Powell Speaks – Monday, 21 March 2021
- US Existing Home Sales – Monday, 21 March 2021
- FOMC Member Barkin Speaks – Monday, 21 March 2021
- FOMC Member Daly Speaks – Monday, 21 March 2021
- FOMC Member Quarles Speaks – Monday, 21 March 2021
- FOMC Member Bowman Speaks – Monday, 21 March 2021
- New Zealand Credit Card Spending y/y – Tuesday, 22 March 2021
- UK Average Earnings Index 3m/y – Tuesday, 22 March 2021
- UK Claimant Count Change – Tuesday, 22 March 2021
- UK Unemployment Rate – Tuesday, 22 March 2021
- UK BOE Gov Bailey Speaks – Tuesday, 22 March 2021
- UK BOE Gov Bailey Speaks – Tuesday, 22 March 2021
- Fed Chair Powell Testifies – Tuesday, 22 March 2021
- USA New Home Sales – Tuesday, 22 March 2021
- USA Richmond Manufacturing Index – Tuesday, 22 March 2021
- US FOMC Member Bostic Speaks – Tuesday, 22 March 2021
- US FOMC Member Brainard Speaks – Tuesday, 22 March 2021
- US FOMC Member Williams Speaks – Tuesday, 22 March 2021
- US FOMC Member Brainard Speaks – Tuesday, 22 March 2021
- New Zealand Trade Balance – Tuesday, 22 March 2021
- Australia Flash Manufacturing PMI – Wednesday, 23 March 2021
- Australia Flash Services PMI – Wednesday, 23 March 2021
- Australia Goods Trade Balance – Wednesday, 23 March 2021
- Japan Flash Manufacturing PMI – Wednesday, 23 March 2021
- UK CPI y/y – Wednesday, 23 March 2021
- UK Core CPI y/y – Wednesday, 23 March 2021
- UK PPI Input m/m – Wednesday, 23 March 2021
- UK PPI Output m/m – Wednesday, 23 March 2021
- French Flash Services PMI – Wednesday, 23 March 2021
- French Flash Manufacturing PMI – Wednesday, 23 March 2021
- German Flash Manufacturing PMI – Wednesday, 23 March 2021
- German Flash Services PMI – Wednesday, 23 March 2021
- EU Flash Manufacturing PMI – Wednesday, 23 March 2021
- EU Flash Services PMI – Wednesday, 23 March 2021
- UK Flash Manufacturing PMI – Wednesday, 23 March 2021
- UK Flash Services PMI – Wednesday, 23 March 2021
- USA Core Durable Goods Orders m/m – Wednesday, 23 March 2021
- US Durable Goods Orders m/m – Wednesday, 23 March 2021
- USA Flash Manufacturing PMI – Wednesday, 23 March 2021
- USA Flash Services PMI – Wednesday, 23 March 2021
- USA Fed Chair Powell Testifies – Wednesday, 23 March 2021
- USA Crude Oil Inventories – Wednesday, 23 March 2021
- EU Consumer Confidence – Wednesday, 23 March 2021
- EU ECB President Lagarde Speaks – Wednesday, 23 March 2021
- US FOMC Member Williams Speaks – Wednesday, 23 March 2021
- US FOMC Member Daly Speaks – Wednesday, 23 March 2021
- US FOMC Member Evans Speaks – Thursday, 24 March 2021
- Japan BOJ Gov Kuroda Speaks – Thursday, 24 March 2021
- German GfK Consumer Climate – Thursday, 24 March 2021
- German GfK Consumer Climate – Thursday, 24 March 2021
- Swiss SNB Monetary Policy Assessment – Thursday, 24 March 2021
- Canada BOC Gov Macklem Speaks- Thursday, 24 March 2021
- EU ECB President Lagarde Speaks- Thursday, 24 March 2021
- UK BOE Gov Bailey Speaks – Thursday, 24 March 2021
- UK BOE Gov Bailey Speaks – Thursday, 24 March 2021
- USA Final GDP q/q – Thursday, 24 March 2021
- USA Final GDP Price Index q/q – Thursday, 24 March 2021
- US Unemployment Claims – Thursday, 24 March 2021
- US FOMC Member Bostic Speaks – Thursday, 24 March 2021
- US FOMC Member Evans Speaks – Thursday, 24 March 2021
- US FOMC Member Clarida Speaks – Thursday, 24 March 2021
- US FOMC Member Daly Speaks – Thursday, 24 March 2021
- UK Retail Sales m/m – Friday, 25 March 2021
- German IFO Business Climate – Friday, 25 March 2021
- USA Core PCE Price Index m/m – Friday, 25 March 2021
- USA Goods Trade Balance – Friday, 25 March 2021
- USA Personal Income m/m – Friday, 25 March 2021
- USA Personal Spending m/m – Friday, 25 March 2021
