Contents
Markets Week Ahead: This week in the markets is expected to be considerably quieter compared to the busy slate of events from last week. This subdued tone is due to two main factors: a lack of major global economic data releases and thinning liquidity as investors prepare for the upcoming Easter weekend.
Markets Week Ahead: Core PCE Data Takes Center Stage
The most significant event of the week will be the release of the Core PCE data in the US. This data point serves as the Federal Reserve’s preferred gauge of inflation. However, the impact of this release might be muted due to its timing – it’s scheduled for Good Friday at 12:30 pm GMT, which often leads to lower market participation.
Market expectations point towards a slight moderation in the month-over-month (MoM) inflation figures. Analysts predict a February reading of 0.3%, down from 0.4% in January. The year-over-year (YoY) print for February is also expected to show a modest rise, reaching 2.8% from 2.4% in January.
At the headline level, the PCE data (MoM) is anticipated to show a small increase of 0.4% in February compared to January’s 0.3%. The YoY print is also expected to exhibit a marginal bump, going from 2.4% to 2.5%.
Fed Rate Decisions and Economic Projections in Focus
It’s important to remember that the Federal Open Market Committee (FOMC) meeting concluded last week, with the benchmark lending rate being held steady at 5.25%-5.50% for the fifth consecutive meeting. This marks the highest rate in over two decades.
While the decision to maintain rates was widely anticipated, the latest Summary of Economic Projections (SEP) revealed that Fed officials still anticipate three rate cuts in 2024. There had been speculation of a potential shift to just two cuts given recent inflation data.
The March economic projections also showed an upward revision in Core PCE inflation for 2024, from 2.4% (projected in December 2023) to 2.6%. However, FOMC participants held their projections steady for 2025 and 2026 at 2.2% and 2.0%, respectively (the Fed’s inflation target).
Markets Week Ahead: Other Data Points to Watch
- US Durable Goods Orders (Tuesday, 12:30 pm GMT): The February data for durable goods orders is expected to show improvement compared to January, with a median estimate suggesting a rise from -6.1% to +1.3% MoM. Durable goods orders excluding transportation are also projected to increase on a MoM basis, going from -0.3% to +0.4%.
- US Consumer Confidence (Tuesday, 2:00 pm GMT): The Conference Board’s consumer confidence data for March is expected to show a slight decline, dipping from 106.7 in February to 106.5.
- US GDP Growth (Thursday, 12:30 pm GMT): The third estimate for US GDP growth in Q4 2023 is expected to be released. Based on the second estimate, real GDP grew at an annualized rate of 3.2% during that period. Analysts anticipate this figure to remain unchanged in the third estimate.
- Australia CPI (Wednesday, 12:30 am GMT): The monthly Aussie CPI indicator will be released in the Asia Pacific region. While January’s print held steady at +3.4% YoY compared to December 2023, economists predict a slight increase to +3.6% for February.
Conclusion
This week in the markets is likely to be a calm one before the Easter weekend. While there’s some data to keep an eye on, the lack of major releases and reduced liquidity will likely lead to a more subdued trading environment.
