Markets concern over inflation have rarely subsided this week. The financial sector is pressuring the central bank to intervene in the bond market, but the Fed is sticking to its attitude of allowing interest rate hikes.
The New York Stock Exchange to continue its volatility this week (22-26) as interest rates move. The position of the market and the authorities, which have interest rates, seems to be a tug-of-war. The Fed professes temporary inflation, but markets are betting on rising interest rates reflecting inflation. Fed Chairman Jerome Powell will be on stage several times this week.
The Bank of International Settlements (BIS) Summit on the 22nd will discuss about it and at the House of Representatives with Finance Minister Janet Yellen will testify on the 23rd. He will attend the Senate on the 24th. Although interest rates have temporarily calmed down in Powell’s remarks, concerns remain about the possibility of a rebound.
Major indicators such as the PCE Price Index (PCE) in February. Which can measure consumption and price conditions, will also be announced. Consumer spending in February is expected to be somewhat sluggish due to the cold wave and heavy snow that hit the entire U.S. However, the temporary slump in consumption is unlikely to have a significant impact on the market. As the economy is resuming smoothly due to the rapid supply of vaccines and additional stimulus measures have begun.
However, the PCE price index, which is released together, is a price index based on the Fed, and if it has risen significantly than expected, the market may be shaken. According to the Wall Street Journal (WSJ) tally, experts predicted that the original PCE price index would have risen 1.5% year-on-year.
Interest rates and inflation are not the only ones shaking the market. Despite the immediate vaccination, new infections are increasing sharply again due to the spread of the mutated virus in Germany, Italy and France. Some areas have tightened containment measures due to concerns over the “third wave.”
It is also a burden that the U.S.-China conflict has been reaffirmed. In the first high-level talks between the two countries since U.S. President Joe Biden took office, it was time to check each other’s differences, including failing to issue a joint statement.
Stocks closed lower in New York last week amid instability in the government bond market. The Dow Jones 30 industrial average fell about 0.5%. The Standard & Poor’s 500 index and the Nasdaq fell 0.8 percent.
Key announcements and speeches regarding the markets this week
The sale price of the existing house will announcement on February 22. Chairman Powell Discusses BIS Summit.
Announcement for current account balance in the fourth quarter and the annual manufacturing index in March the 23rd. Powell’s testimony to the House.
On the 24th, IHS Market, an information provider and durable goods orders, is going to announce the Manufacturing and Service Purchasing Managers’ Index (PMI) for March. As well as President Powell’s testimony to the Senate.
On the 25th, there’ll be announcement of the number of new unemployment insurance claimants. Also the revised GDP growth rate for the fourth quarter.
