Top 5 Things To Watch In The Markets In The Week Ahead By


by Noreen Burke — The U.S. employment report for March is due out on Friday and will be closely watched as it is the last monthly employment report before the next Federal Reserve meeting in May. Before that, there will be an update on inflation in what will be a busy week on the economic calendar. Developments in the Ukraine and oil prices will also continue to shape market sentiment as the first quarter draws to a close. Here’s what you need to know to start your week.

  1. Non-Farm Payrolls

Friday’s March Non-Farm Payrolls report could help markets get a sense of whether the Fed’s roadmap for rate hikes is too aggressive or not aggressive enough.

Economists expect the US economy to have added jobs, after 678,000 were created in February. Average hourly earnings are forecast to rise year-over-year, while the unemployment rate is expected to drop to .

Indications of continued strength in the labor market would underscore the case for a more aggressive pace of rate hikes as the Fed struggles to rein in runaway inflation.

The Fed raised rates by a quarter of a percentage point on March 16, but Fed Chairman Jerome Powell has since indicated that the central bank is prepared to raise rates in half-point increments if warranted. despite fears that this could trigger an economic downturn.

  1. inflation data

Ahead of the jobs report, the US is to release February figures on personal income and spending on Thursday. The report contains data on personal consumption expenditures, a gauge of inflation closely watched by the Federal Reserve.

Economists expect the core PCE price index to rise annually, staying well above the Federal Reserve’s 2% inflation target.

The economic calendar also features updates on , , and .

Additionally, New York Fed President John, Philadelphia Fed Chief Patrick Harker, Atlanta Fed President Raphael and Richmond Fed President Thomas will make appearances throughout the week. .

  1. oil prices

Oil prices posted their first weekly gain in three last week, surging more than 11.5% and rising 8.8%.

Oil prices have soared, rising 50% since the start of the year, amid sanctions against top supplier Russia in retaliation for its invasion of Ukraine.

Rising oil prices have been fueling inflation expectations, burying hopes from global central bankers that inflation fueled by pandemic-era stimulus packages would be transitory.

Jerome Powell said last Monday that the US economy is clearly better able to withstand an oil shock now than it was in the 1970s. The US is the world’s largest oil producer. But this didn’t stop Powell from issuing a harsher note on inflation (see above) than he did at the news conference after the Fed hiked rates just days earlier.

  1. Stock Exchange

Wall Street’s three major indices closed last week higher, with the and the rising 2% and 1.8%, respectively, while the managed a 0.3% rebound.

US Treasury yields rose on Friday, with the benchmark note climbing to nearly three-year highs, as the market grappled with high inflation and a Federal Reserve that could easily spark a recession as it aggressively tightens politics.

The stock market is trading in a higher rate environment, Keith Buchanan, a portfolio manager at Globalt Investments in Atlanta, told Reuters.

That is causing bank stocks to outperform, while “adding more pressure to the riskier elements of the market” such as growth stocks, he said.

  1. eurozone inflation

The eurozone is to release inflation data on Friday and economists expect to hit a new record of 6.5% amid rising energy costs.

The European Central Bank has indicated there’s no rush to raise interest rates, but given its 2% inflation target, it’s no surprise some officials are calling for a rate hike or two this year.

A strong inflation reading will strengthen your argument. But bond markets also suggest higher rates are on the way, having priced in five moves of 10 basis points each by the end of the year.

Germany’s bond yield has risen 30 basis points so far in March, marking its biggest monthly rise since 2011. After spending years in negative yield territory amid the ECB’s bond buying to boost inflation, is rapidly approaching 0%.

–Reuters contributed to this report

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