The Week Ahead, 20 - 24 March 2023
London, Monday, 20 March 2023
Following the turmoil of the previous week, investors will continue to keep an eye on the state of the banking industry while waiting for key central banks like the Fed, BoE, SNB, and Norges Bank to announce their monetary policy decisions. The UK, Canada, and Japan's inflation rates as well as Germany's Zew Economic Index will also be in the limelight. Finally, information on the manufacturing and services sectors' health in March should be available from PMI statistics for the US, Japan, UK, Euro Area, Germany, and France.
Following recent turmoil in the financial industry, which added yet another layer of uncertainty, all eyes will be on the Federal Reserve's most recent monetary decision in the US. Despite the recent turmoil in the financial sector, policymakers are seen increasing the interest rate by 25 basis points to 5% in an effort to slow the economy and lower elevated inflation. For hints on the Fed's perspective on the terminal level, inflation, economic growth, and unemployment outlooks, investors will also look for updated economic forecasts and dot plot estimates. The Commerce Department will also release data on February's sales of new homes and durable products. S&P Global will release purchasing manager surveys in March that gauge activity in the US industrial and services sectors.
The National Association of Realtors will release sales of previously owned US homes in February at the same moment.
In the United Kingdom, the Bank of England is expected to hike interest rates by 25bps to 4.25%, bringing borrowing costs to a level not seen since November 2008 in an effort to curb inflation. The annual rate slowed to 9.8% from 10.1% in February as a result of the headline inflation likely increasing by 0.6% month-over-month, which is still well above the 2% goal. The flash S&P Global PMI, Gfk consumer sentiment, producer prices, retail trade, public sector net borrowing, and CBI gauge for factory orders are also items that traders are anticipating.
The central banks of Switzerland, Norway, and Turkey will make interest rate decisions on behalf of the remainder of Europe. Additionally, it is expected that March's flash S&P Global PMIs will show that private sector business activity in the Eurozone expanded for a third consecutive month, primarily as a result of a less severe decline in the manufacturing sector, which includes Germany and France. Additionally, it appears that consumer confidence in the Euro Area has increased for a sixth month, while investor confidence in Germany is expected to be declining from a one-year peak. Other important economic data feature Eurozone's construction output and current account; Germany's producer prices; Switzerland's foreign trade, and final Q4 GDP figures for Spain and the Netherlands.
In Asia, the People's Bank of China is anticipated to maintain its lending prime rates in the wake of fresh liquidity infusions in an effort to support the nation's economic recovery even more. Investors will be looking for information on Governor Kuroda's most recent conference in the BoJ's Summary of Economic Opinions. CPI information for February and interim PMI data for March will also be made public in Japan. In other countries, the Philippine central bank will decide on its interest rate, and Malaysia will announce its February CPI reading. The March PMI data and the RBA's most recent meeting minutes will be closely watched in Australia because they could reveal how near the cash rate is to reaching its peak.
(Research and report by: The Decision Maker - Finance editors)