Fed Meeting Minutes, Inflation & Eurozone PMI Preview: Get Your Week Started

The most recent minutes of the Federal Reserve’s meeting will be closely watched in light of the heightened uncertainty over how high interest rates may finally rise in the central bank’s fight against inflation. On Friday, personal income and spending data will provide more information about pricing pressures, and earnings from large retailers will provide some information about how customers are faring in the face of rising costs. Flash PMI data for the Eurozone will be released, and the new governor of the Bank of Japan’s testimony may shed further light on his stance on monetary policy. This information will help you get your week started.

The Federal Reserve will release the meeting minutes from its January meeting on Wednesday. Following a year of astronomical increases, the Fed slowed the rate of interest rate hikes to 25 basis points.

Since then, data have showed that the annual rate of inflation is no longer falling while producer prices in January increased by the most in seven months.

The information has led investors to reassess their predictions for how high the Fed will ultimately hike rates, along with a positive January jobs report for the United States. The federal funds rate is now expected to reach its peak over 5.2% in July, according to interest rate futures.

After recent statements from several policymakers indicating support for such a move, the minutes may provide investors with some insight into the desire for a higher rise at the Fed’s forthcoming March meeting.

On Friday, the United States will release personal income and spending statistics that will be keenly followed. This data includes the Fed’s preferred inflation indicator, the core personal consumption expenditures price index.

Updates on both new and existing home sales for January are also included in the economic calendar, along with updated figures for the fourth quarter’s gross domestic product and the weekly report on unemployment claims.

John Williams, the president of the New York Fed, will discuss inflation on Wednesday at a gathering.

Results from big retailers will provide insight into the resilience of consumer spending amid rising prices as an unimpressive fourth-quarter earnings season comes to a close. This is a crucial topic for investors.

Home Depot (NYSE:HD) and Walmart (NYSE:WMT), the two largest retailers in the world by sales, are expected to report on Tuesday and will “set the tone for everyone else,” according to JPMorgan retail analysts.

The JPMorgan analysts stated in an earnings preview report last week that they “anticipate HD and WMT’s tone on guidance and the consumer to be at best cautious.” They rank Home Depot as “overweight” and Walmart shares as “neutral.”

Beyond the retail industry, manufacturers of the COVID-19 vaccine Moderna (NASDAQ:MRNA), eBay (NASDAQ:EBAY), and discount retailer TJX Companies (NYSE:TJX) will also release earnings reports in the upcoming week.

The Tuesday flash PMI report for February, which will reveal how the economy is doing after surprisingly expanding in the final quarter of 2022, will be the economic highlight of the week for the Eurozone.

It may be more likely for the European Central Bank to raise interest rates in the future if stronger business conditions are a factor in rising price pressures. This is because of the persistently high inflation rate.

The Ifo Business Climate Index for Germany will reveal how the largest economy in the area is coping with the energy crisis on Wednesday. Economists anticipate signs of recovery to remain modest.

On Thursday, the union will also issue the final inflation data for January, which will be closely watched since delayed German data was left out of the initial estimate.

Academic Kazuo Ueda, who is anticipated to succeed current Governor Haruhiko Kuroda when his second five-year term expires in April, is currently in charge of the BOJ.

The lower house of parliament will hear testimony from the incoming BOJ governor and his two potential replacements on Friday.

Investors anticipate that Ueda will abolish the controls on the yield curve even if he is a dove. But when is the $8 trillion question for the Japanese bond market.

His testimony will be thoroughly scrutinised and ought to provide some hints. The following Monday will be the date of his upper house testimony.