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Markets, the key appointments of the week

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Markets, the key appointments of the week

The highlight of the week of March 20-24 will undoubtedly be the meeting della Federal Reserve, which will meet from Tuesday and will announce its interest rate decision on Wednesday (at 19:00 Italian time). From the macroeconomic agenda, the preliminary PMI indices for March, in Europe and in the USA. Here are all the key appointments for the next few days on the markets.

Central banks, focus on the Fed

As for the Fed, forecasts are for a 25 basis point squeeze, but doubts remain high after the events of recent days that have upset the banking sector. The bankruptcy of Silicon Valley Bank and Signature (but also the difficulties of the Swiss Credit Suisse), and the turbulence that has affected First Republic Bank require greater caution in order not to undermine the stability of the financial system and not compromise the transmission of monetary policy.

At the same time, maintaining the status quo on rates could be interpreted by the markets as the end of monetary tightening. A signal contrary to the intentions of the central bank, if we also consider the restrictive tone used by Jerome Powell a few days before the bankruptcy of the SVB.

All this, without forgetting the latest data on inflation (core CPI at 5.5% y/y) which, although slowing down, remains at levels very far from the Fed’s 2% target. It is therefore likely that the FOMC will opt for an increase of 25 basis points, also in light of the work of the ECB, which raised rates by half a percentage point in the last week.

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As MPS analysts point out, “it will be interesting to see where the median of the new Dots projections will be positioned at the end of the yearconsidering that the money market has once again strongly discounted a rate cut in the second half of the year equal to around 75bp from the peak of 5% in May”.

Focus also on the ECB, the BOE and the SNB

Still on the central bank front, Christine Lagarde is scheduled to hear a hearing in the European Parliament’s Committee on Monetary Affairs on Monday, number one of the ECB. Also scheduled in the following days are some speeches by other members of the continental monetary authority, with speeches by Lane, Nagel and Holzmann.

Thursday instead they will meet, among others, the Bank of England and the Swiss National Bank. The first, Mps underlines, “is expected to raise rates by 50 bps, but will be monitored particularly given the recent tensions that have affected Credit Suisse. The second, however, should raise rates by 25bp while signaling a pause in the restrictive monetary cycle”.

Already last month, as ING experts point out, “the BoE signaled that the end of tightening may already have arrived, or at least be close”. On that occasion, the institute said it would monitor signs of “persistence of inflation” and data since then has been “encouraging”, with wage growth possibly nearing its peak.

Macro data: March PMI and Eurozone consumer confidence

The will be published on Friday preliminary PMI indices for the month of March in Japan, France, Germany, the Eurozone, the United Kingdom and the United States.

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The index release is scheduled for Tuesday Zew on business expectationswhile the March preliminary numbers are expected on Thursday consumer confidence in the eurozone.

Overall, the data will provide valuable signals on this quarter’s performance. So far, says MPS, “sentiment data has painted a relatively positive picture of the economy in February, but hard data for the first quarter show little sign of a strong rebound. Also of interest will be the January trade balance, which saw large movements in energy import volumes and prices.”

The forecasts collected by Bloomberg, adds Mps, indicate “a continuation of the recovery in the manufacturing sector in the Eurozone, while the services sector should be more or less in line with the previous month. In the USA, expectations are for a number substantially in line with the February figure in the manufacturing sector and a slight slowdown in the services sector.”

Also to follow UK February inflationout on Tuesday, i.e. before the BoE meeting.

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