Yazar: Noreen Burke
Investing.com – The rapid increase in Treasury yields and the shaking in stocks will continue to be a major focus for next week – especially if strong economic data push Treasury returns further. Investors will focus on Friday’s employment report. Virus restrictions are expected to have a negative impact on February job growth. A number of Fed officials will speak, including Chairman Jerome Powell. With prices hovering near the 13-month high, the OPEC + coalition is expected to decide on a moderate increase in production at its meeting on Thursday. As Britain’s budget in Europe is released Wednesday, Eurozone economic data will show how well the economy can cope with ongoing epidemic restrictions.
What you need to know when starting the new week:
1.Fierce competition between stocks, increasing bond yields
The return to energy, finance and other stocks will benefit with the acceleration of the re-opening process of the economy. Rapidly increasing Treasury yields are putting pressure on technology stocks, which have been driving market increases for years.
Technology stocks are particularly sensitive to rising returns. Because their value is heavily dependent on futures earnings, which drop sharply when interest rates rise.
The Fed’s dovish language and expectations for additional incentives have raised concerns about inflation, driving returns to rise, and the two-way market is likely to continue, at least in the short term.
On the other hand, the earnings period is coming to an end, but retailers will continue reporting: Target, Kohl’s and Nordstrom on Tuesday will report Costco on Thursday.
2. February work report
As President Joe Biden’s $ 1.9 trillion coronavirus stimulus package goes to the Senate, the February non-farm payroll report, released Friday, will show how the labor market recovery is progressing.
Last week’s government data showed an unexpected drop in initial jobless claims. The applications, which saw the lowest level in three months, pointed out that the labor market has gained some momentum with decreasing infection rates. Retail sales also picked up in January.
Economists expect the US economy to create 165,000 new jobs in February, after an increase of 49,000 in January. But the winter storm sweeping the South could confuse things.
3. Powell’s speech
With the rapid increase in Treasury yields angering the stock markets, investors hope Fed officials will handle sales in Treasury bonds.
Fed Chairman Jerome Powell will speak about the economy at an online event hosted by the Wall Street Journal on Thursday. Until now, there have been little signs of concern among Fed officials about high Treasury yields.
Last week, Powell said that the bullish movement is the result of a stronger economy, but the pace of economic recovery has slowed in recent months and reiterated that monetary policy will remain expansionary for a while.
Other Fed officials to speak include New York Fed Chairman John Williams, Fed Administrator Lael Brainard, Atlanta Fed Chairman Raphael Bostic, San Francisco Fed Chairman Mary Daly, Philadelphia Fed Chairman Patrick Harker and Chicago Fed Chairman Charles Evans.
4th OPEC + meeting
With oil prices hovering at 13-month highs, OPEC + producers are expected to meet on Thursday and discuss an increase in production starting in April.
OPEC + cut production by 9.7 million barrels per day last year when the epidemic destroyed global demand.
OPEC + sources think that an increase in production of 500,000 barrels per day seems possible without causing an increase in stocks as economies recover.
Russia is willing to increase supply. Saudi Arabia’s voluntary cut of 1 million barrels also ends in March, and this supply could return to the market from April.
5. UK budget, euro area data
UK finance minister Rishi Sunak will pledge more budget spending on Wednesday, but this may be the last piece of support it offers in relation to the outbreak. The budget is expected to have borrowed more from Covid-19 spending and tax cuts of about £ 300 million ($ 418 billion).
The budget plan, which is one of the biggest factors determining the pace of economic recovery, will be closely monitored.
On the other hand, inflation, PMI, retail sales and unemployment data in the euro zone will show how far the economy has progressed ahead of the European Central Bank’s (ECB) meeting later this month.
– This news has the contribution of Reuters.