Sunday Mar 13 2022 05:59
28 min
Whilst headlines from Ukraine will be driving a lot of the market action, especially in commodities, traders are looking ahead to the Federal Reserve, which looks set to raise rates and embark on a tightening cycle. The Bank of England will also meet this week amid soaring inflation pressures for the UK.
FOMC Meeting
The Federal Open Market Committee (FOMC) meeting this week marks a turning point for the Fed as it begins raising interest rates. The question is not whether it will announce a 25bps hike at this meeting, but how many more are likely to follow. “I’m inclined to propose and support a 25-basis point rate hike,” Powell said during a March congressional testimony. Chicago Fed president Charles Evans said the US central bank should raise rates close to neutral, which implies seven hikes this year. BofA: “Labour market momentum is tremendous, and we expect labour demand to continue to outpace labour supply… In short, we still expect the Fed to hike by 25bps at each of its seven meetings this year, though Russia and Ukraine adds uncertainty”. Consensus is about 5 hikes. Markets will also be watching for any word about QT and what policymakers think about the economic impact of the war in Ukraine and sanctions on Russia. Presumably it means more inflation.
Bank of England
Before the Russian invasion of Ukraine, markets were expecting interest rates in the UK to hit 1.75% by December and 2% by the middle of 2023. Traders have pared those bets back a bit, but the MPC is still expected to vote to raise rates by another 25bps to 0.75% this week. Two-thirds of economists polled by Reuters believe the Bank will raise rates for the third straight meeting. Almost half the MPC voted for a 50bps hike last time, meaning it seems all but certain the BoE opts hike.
Ukraine War
Commodity markets remain sensitive to developments in Ukraine, the West’s sanctions and any counter measures from the Kremlin. Last week saw high levels of volatility in various markets including oil, palladium and wheat as markets responded to events in Ukraine and worried about the potential loss of supply from sanctions.
US Producer Inflation
Consumer inflation is setting 40-year records and leading indicators show it’s getting worse. US producer price inflation numbers due this week are likely to be high again. Italy’s PPI for January came in at 41.8% – before the situation in Ukraine led to massive commodity price spikes.
Major economic data
| Mon Mar 14 | Tentative | EUR | German WPI m/m |
| Tentative | CNH | Foreign Direct Investment ytd/y | |
| 7:45am | EUR | French Trade Balance | |
| 8:00am | CHF | SECO Economic Forecasts | |
| All Day | EUR | Eurogroup Meetings | |
| 9:30pm | NZD | BusinessNZ Services Index | |
| Tue Mar 15 | 12:30am | AUD | Monetary Policy Meeting Minutes |
| AUD | HPI q/q | ||
| 2:00am | CNH | Retail Sales y/y | |
| CNH | Fixed Asset Investment ytd/y | ||
| CNH | Industrial Production y/y | ||
| CNH | NBS Press Conference | ||
| CNH | Unemployment Rate | ||
| 7:00am | GBP | Average Earnings Index 3m/y | |
| GBP | Claimant Count Change | ||
| GBP | Unemployment Rate | ||
| 7:30am | CHF | PPI m/m | |
| 7:45am | EUR | French Final CPI m/m | |
| 9:00am | EUR | Italian Trade Balance | |
| 10:00am | EUR | ZEW Economic Sentiment | |
| EUR | German ZEW Economic Sentiment | ||
| EUR | Industrial Production m/m | ||
| All Day | EUR | ECOFIN Meetings | |
| 12:15pm | CAD | Housing Starts | |
| 12:30pm | CAD | Manufacturing Sales m/m | |
| USD | PPI m/m | ||
| USD | Core PPI m/m | ||
| USD | Empire State Manufacturing Index | ||
| 2:30pm | AUD | CB Leading Index m/m | |
| Tentative | NZD | GDT Price Index | |
| 8:00pm | USD | TIC Long-Term Purchases | |
| 9:45pm | NZD | Current Account | |
| 11:30pm | AUD | MI Leading Index m/m | |
| 11:50pm | JPY | Trade Balance | |
| Wed Mar 16 | 4:30am | JPY | Revised Industrial Production m/m |
| 9:00am | CHF | Credit Suisse Economic Expectations | |
| 12:30pm | CAD | CPI m/m | |
| CAD | Common CPI y/y | ||
| CAD | Median CPI y/y | ||
| CAD | Trimmed CPI y/y | ||
| CAD | Core CPI m/m | ||
| CAD | Wholesale Sales m/m | ||
| USD | Core Retail Sales m/m | ||
| USD | Retail Sales m/m | ||
| USD | Import Prices m/m | ||
| 2:00pm | USD | Business Inventories m/m | |
| USD | NAHB Housing Market Index | ||
| 2:30pm | USD | Crude Oil Inventories | |
| 6:00pm | USD | FOMC Economic Projections | |
| USD | FOMC Statement | ||
| USD | Federal Funds Rate | ||
| 6:30pm | USD | FOMC Press Conference | |
| 9:45pm | NZD | GDP q/q | |
| 11:50pm | JPY | Core Machinery Orders m/m | |
| Thu Mar 17 | 12:30am | AUD | Employment Change |
| AUD | Unemployment Rate | ||
| AUD | RBA Bulletin | ||
| 10:00am | EUR | Final CPI y/y | |
| EUR | Final Core CPI y/y | ||
| 12:00pm | GBP | MPC Official Bank Rate Votes | |
| GBP | Monetary Policy Summary | ||
| GBP | Official Bank Rate | ||
| 12:30pm | CAD | ADP Non-Farm Employment Change | |
| USD | Philly Fed Manufacturing Index | ||
| USD | Unemployment Claims | ||
| USD | Building Permits | ||
| USD | Housing Starts | ||
| 1:15pm | USD | Industrial Production m/m | |
| USD | Capacity Utilization Rate | ||
| Tentative | CAD | ADP Non-Farm Employment Change | |
| 2:30pm | USD | Natural Gas Storage | |
| 11:30pm | JPY | National Core CPI y/y | |
| Fri Mar 18 | 12:01am | GBP | GfK Consumer Confidence |
| Tentative | JPY | Monetary Policy Statement | |
| Tentative | JPY | BOJ Policy Rate | |
| 4:30am | JPY | Tertiary Industry Activity m/m | |
| Tentative | JPY | BOJ Press Conference | |
| 7:00am | GBP | Retail Sales m/m | |
| 10:00am | EUR | Trade Balance | |
| Tentative | GBP | 10-y Bond Auction | |
| Tentative | EUR | German 30-y Bond Auction | |
| 12:30pm | CAD | Core Retail Sales m/m | |
| CAD | Retail Sales m/m | ||
| CAD | Foreign Securities Purchases | ||
| CAD | NHPI m/m | ||
| 2:00pm | USD | Existing Home Sales | |
| USD | CB Leading Index m/m |
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