5 key developments to watch in the markets next week By Investing.com

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Yazar: Noreen Burke

Investing.com – Investors will follow a joint statement from Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen on Tuesday and Wednesday. There are concerns about how long the increases in treasury yields will continue. A summit organized by the Bank for International Settlements (BIS) starts on Monday and there will be speeches from global central bank leaders including Powell. The US economic calendar includes data on housing and personal income and spending. On the other hand, the Eurozone will publish PMI data for March, and the UK will publish a series of data on jobs, inflation, PMI and retail sales.

Here’s what you need to know when starting the new week:

1. Powell and Yellen statements

Powell and Yellen will testify before the Financial Services Committee of the House on Tuesday and before the Senate Banking Committee on Wednesday. The health of the US economy and the importance of financial and monetary stimulus will be discussed in the issue of recovery from the pandemic.

There are also a dozen Fed officials to speak during the week: Vice President Richard Clarida, Vice President Randal Quarles, Fed Administrator Lael Brainard, and New York Fed Chairman John Williams.

Financial markets diverge with the Fed on the possible future outlook for monetary policy, and the US Treasury yield hit a one-year high.

Investors are priced with the idea that the first rate hike will be made sooner than the Fed now anticipates. With President Joe Biden’s massive stimulus package and the Fed’s expansionary monetary policy, there are fears that the economy will overheat as it recovers from the pandemic.

2nd BIS summit

Before his testimony with Yellen in Congress, Powell will speak on Monday at the start of a four-day conference held by BIS on innovation in the digital age.

Other global central bank leaders to speak at the summit include European Central Bank (ECB) Christine Lagarde, Bank of England (BoE) executive Andrew Bailey and Bank of Canada (BoC) executive Tiff Macklem.

On the other hand, a number of central banks, including Switzerland, Mexico and South Africa, will hold policy meetings throughout the week.

The Swiss Central Bank (SNB) is expected to keep interest rates unchanged at -0.75%, the lowest in the world and maintain its interventionist stance at its meeting on Thursday.

3.US economic data

On the data front, durable goods orders and personal income and expenditure reports will be the prominent data of the week, with new and existing home sales figures.

Housing data is likely to be weak due to the impact of severe winter storms on economic activity in February, along with personal income and spending figures, including the PCE deflator, the Fed’s preferred inflation metric. However, economists consider the decline to be short-lived.

The US will also share the latest revision to the fourth quarter GDP data of 2020. It was most recently reported as 4.1% per year.

4. Volatility exchange

While indices continue to close at record highs, investors are likely to continue to focus on the increase in bond yields that suppress stock prices.

Optimism about the economic recovery prospects accelerated the move towards bank and other stocks and pushed Dow indices to record levels last week.

However, with valuations that seemed less attractive as Treasury yields increased, the Nasdaq fell behind as technology and high-growth shares have lost their appeal in recent months.

As the Biden administration seeks to pay for its spending plans, investors may start to worry about the prospect of higher taxes that could threaten the rally in US stock markets.

5.Euro zone, UK data

March PMI data in the eurozone will shed light on how the block economy will perform on the backdrop of chaotic vaccine distribution.

The UK will share a string of data starting with business data on Tuesday. Economists expect the unemployment rate to be stable. While inflation data is expected to rise on Wednesday, PMI data on reopening optimism expects the dominant service sector to recover.

Retail sales figures to be released on Friday are expected to show a partial recovery following the big drop in January. Considering all the reports together, it may indicate that the UK economy has recovered from the worst part of the pandemic crisis.

– This news has the contribution of Reuters.

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