Data from U.S.
On Friday, the release of official data indicated a robust rebound in consumer spending and an acceleration in inflation, fueling concerns over a scenario of sustained high growth and inflation, which could prompt the Federal Reserve to keep interest rates elevated for an extended period, leading to a “no landing” economic situation.
This week, investors will receive several fresh insights into the strength of the economy, with a plethora of data scheduled for release, including reports on durable goods orders, consumer confidence, and home sales. Wednesday and Friday will see the release of the ISM manufacturing and service sector reports for February, respectively. Of particular interest on Tuesday will be the consumer confidence data, which could provide a glimpse into households’ views on economic prospects and inflation expectations, with economists anticipating a rise to 108.5 following an unexpected decline in January.
The upcoming week is expected to be relatively quiet for Fed speakers, with Governor Chris Waller’s speech on the economic outlook on Thursday being the main highlight.
Eurozone Inflation Data
The upcoming meeting of the European Central Bank in mid-March is expected to result in another 50-basis point rate hike, but beyond that, there is still debate over what will happen. As a result, this week’s preliminary data on Eurozone inflation, which is due to be released on Tuesday, Wednesday, and Thursday, will be closely monitored.
While the annual rate of inflation in the Eurozone decreased from 9.2% to 8.6% in January, the focus will likely be on core inflation, which excludes the volatile food and energy prices. Annual core inflation is anticipated to remain at 5.3%, consistent with the previous month’s reading.
Despite the easing of price pressures, with inflation still considerably above the ECB’s 2% target, hawkish ECB officials will probably not be placated by Thursday’s figures, as they are advocating for continued aggressive rate hikes.
Data From China
The publication of PMI data on Wednesday will provide investors with insight into the status of China’s economic reopening, with early indicators pointing to a comeback in consumer activity during the Lunar New Year vacation period.
If the news is positive, it could revive some enthusiasm for the reopening trade, which looks to be dwindling, since the A-share blue-chip CSI 300 Index has been virtually steady this month after soaring 7% in January.
Growth in the world’s second-largest economy declined to one of the lowest levels in five years in 2022 as a result of tight COVID-19 lockdowns and limitations, until Beijing loosened its rigorous zero-COVID policy.
