As global markets in general continue to come under downward pressure, it is becoming more and more important to pay attention to the economic calendar, and the fundamentals of market data.
During the recent bull cycle, markets have tended to put little weight behind the fundamentals of the pandemic, choosing to focus instead on growth potential, and the seemingly improving position of the consumer as far as savings go.
This seems to have flipped in recent months, with the narrative firmly focusing on the energy price crisis, the war in Ukraine, and inflationary pressures, with fundamentals in general seeming to carry a lot more significance than in recent periods.
With that being said, we are flagging up below 3 events on the economic calendar you will want to pay attention to in the market this week.
3 Events On The Economic Calendar We Are Watching This Week
- US Economic Data – Whilst the recent inflationary data from last week (8,6%) was eagerly anticipated, and running hotter than expected, there are still some additional data points from the US economy that you will want to keep in mind.
We will be watching the producer price inflation (Tues), retail sales (Weds), jobless and housing claims (Thurs), before tuning in for industrial production numbers (Fri). With CPI at levels not seen since 1981, there is truly some additional pressure on household spending power, and many of these metrics are expected to be below what the market would like to see. Significant surprises to either side will cause volatility. - Bank of England Interest Rate Announcement – Thursday will usher in news from the BoE on the path for interest rates for the UK. With the expectation of a further 25 bps hike, it is clear that the Bank is trying to bring inflation under control, but struggling amidst global pressures.
GDP Data (Mon), followed by employment data (Tues) are a couple of key economic data points from the UK to pay attention to; but regardless of how the economy is shaping up, the rate rise is still largely baked in to pricing due to the clear consensus of most analysts.
If there are moves from the BoE over and above what is expected, you will likely see wilder movement in GBP than would usually be anticipated. - Fed Rate Announcement – Wednesday will the day that many are keeping on the highlight reel for week 24, as the Fed will announce a rate hike expected by consensus analysis to be 50 bps. Consensus also seems to have priced in another 50 bps hike in the next month, with some potential slowing of rate increases post July.
The pressure on the Fed to try to get a handle on inflation, which as 21 year highs, as well as try to leave room for the economy to not fall into recession is palpable; but may yet prove to a battle that is already lost. Sides will need to be picked, but at this stage, it seems inflation is higher on the list of priorities.