Key Focus Areas for the Coming Week
U.S. Inflation Data
The spotlight in the upcoming week will be on U.S. inflation data following the strong jobs report that hinted at a possible delay in interest rate cuts by the Federal Reserve. Economists anticipate a slowdown in core inflation, excluding food and fuel costs, to year-over-year from the previous month’s 3.8%. Additionally, data on is expected to show a more moderate increase. The latest employment numbers, coupled with sluggish inflation progress, have led top Fed officials, including Chair Jerome Powell, to advocate for a cautious approach to rate cuts.
Fed Minutes and Speakers
The Federal Reserve will release the minutes of its March meeting, where officials maintained expectations for three rate cuts this year with reduced conviction compared to previous forecasts. The markets have adjusted to anticipate two rate cuts in light of the recent jobs data. Market participants will closely monitor speeches by New York Fed President John and Fed Governor Michelle Bowman’s remarks on the urgency of rate cuts and inflation progress.
Earnings Season
The earnings season kicks off with major banks reporting their quarterly results. Investors are optimistic about robust corporate profits supporting stock market valuations, which have soared to record highs. Companies like JPMorgan Chase, Citigroup Inc, Wells Fargo, Delta Air Lines, and BlackRock are among those scheduled to provide updates. Expectations are high for strong results amidst economic and inflationary uncertainties.
Oil Prices
Geopolitical tensions, supply concerns, and demand growth expectations have bolstered oil prices, with crude settling at its highest levels since October. The markets are closely monitoring potential conflicts in the Middle East that could impact oil supply, particularly involving Iran and Israel. Analysts speculate on the implications of any direct attacks on Israel by Iran and the subsequent impact on global oil markets.
ECB Meeting
The European Central Bank convenes this week, widely expected to maintain steady rates before a potential rate cut cycle in June. President Christine Lagarde’s comments will provide insights into future monetary policy decisions, with markets anticipating a rate cut in June. Recent data indicating a decline in Eurozone inflation further supports expectations for a rate reduction. Additionally, central banks in and are also meeting this week, with no changes in interest rates anticipated.
