Ukraine will remain in focus with any new development set to create volatility. Also, investors will be paying attention to the covid situation as the virus is again spreading in Europe and Asia and causing lockdowns in Chinese cities. Finally, speeches from several Fed officials should provide further clues on the course of US monetary policy.
In the US, several Fed officials will also make an appearance, including Fed Chair Powell on both Monday and Wednesday, with traders looking for any clues on whether the central bank will deliver a 50bps rate hike in May and what plans it might have for running down its $8.9 trillion balance sheet. Last week, the Fed started its tightening process and raised the fed funds rate by 25bps while setting a more hawkish tone and indicating a further 6 rate increases this year. Also, investors will keep an eye on flash Markit PMIs for March, durable goods orders, new and pending home sales, current account, the final Michigan consumer sentiment, and regional activity indexes from the Chicago Fed, the Richmond Fed and the Kansas Fed.
In the United Kingdom, all eyes turn to Chancellor Rishi Sunak’s Spring Budget Statement on Wednesday as soaring petrol and diesel prices hit households and businesses. Also, investors will be awaiting flash Markit PMIs, inflation rate, retail trade, public sector net borrowing and CBI gauges for factory orders and distributive trades. The UK consumer price index is expected to shoot up 5.9% from a year ago in February, the highest since 1992; while retail sales are set to ease after rebounding the most in 9 months; and private sector growth to slow down from an 8-month high.
Elsewhere in Europe, flash Markit PMIs for the Eurozone, Germany and France are likely to point to a slowdown across both the manufacturing and the services sector amid geopolitical chaos from the invasion of Ukraine. Also, consumer confidence in the Euro Area and the Ifo business climate indicator for Germany are seen falling to a 13-month low in March. On the monetary policy front, the Norges Bank is set to hike interest rates by 25bps to contain inflation while the Swiss National Bank most likely will keep rates on hold and reiterate its pledge to intervene in the currency markets to curb a rise in the franc, if necessary, as the currency appreciated along with other safe havens due to war in Ukraine. Other key publications are: Eurozone current account, construction output and monetary indicators; Germany producer prices; Switzerland current account and Turkey consumer and manufacturing morale.
Also, Russia has further debt payments due next week, which will be highly monitored given the possibility of a default and related spillover risks, as the country is under the harshest economic sanctions ever applied to a nation, following its invasion of Ukraine.
In China, the People’s Bank of China monetary policy meeting will take place, in which policymakers could leave the key 1-year Loan Prime Rate steady, after an unexpected decision to hold the Medium-Term Lending Facility Rate steady this week. In the Philippines, the central bank also meets to decide on interest rates. Also, Malaysia, Hong Kong, and Japan will publish their February consumer price inflation rates.
Elsewhere in America, it will be interesting to follow: Canada producer and raw materials inflation and manufacturing sales; Argentina GDP growth figures for Q4; Mexico monetary policy decision and monthly activity growth; and mid-month CPI figures for both Mexico and Brazil.