Following last week’s Budget, plus the recent volatility in the banking sector and beyond through the SVB Bank collapse and the news of the takeover of Credit Suisse by UBS, Thomas Watts, Investment Analyst, abrdn, has shared his overview about the economic news and data releases which will be forthcoming this week commenting;
“Headline events come in the form of central bank meetings in the US and UK. The Federal Open Market Committee (FOMC) meet on Wednesday, with the market forecasting a 0.25% hike in interest rates at the time of writing. There’s clearly uncertainty about this, with a real possibility they might leave rates unchanged. Where the market will focus just as intently on, however, is what Jay Powell says regarding the future path of rates. With such a substantial re-pricing within markets, we expect a pick-up in volatility around the Bank’s meeting.
“Market expectations for the Bank of England’s (BoE) Monetary Policy Committee (MPC) meeting on Thursday are also in the balance, with a consensus 0.25% hike but don’t be surprised if they pause at this meeting either despite headline CPI still stubbornly in double-figures at 10.1%. Many commentators feel the BoE continue to remain behind the curve and should be hiking further than forecast, but it’s important to remember that the UK economy arguably has higher sensitivity to changes in interest rates than the US, for example. This is particularly the case when it comes to the housing market due to much shorter-term nature of UK fixed mortgages.
“Helpfully for the MPC, the day before they meet the latest UK inflation report is released for February, covering CPI, RPI and PPI and we’ll see the size of inflationary pressures placed on consumers. On Friday we’ll also see how these pressures are impacting consumer spending habits, with February’s retail sales released. A reminder that consumer spending in the UK contributes around two-thirds to GDP, so retail sales is a crucial datapoint to analyse.
“Friday is also the day of Purchasing Manager Indices (PMIs) to give us insight into the health and sentiment of the services and manufacturing sectors. Preliminary March PMIs are released for the US, UK and Eurozone. All three have recovered in recent months to post levels above the 50-mark, indicating growth.
“Whilst we eagerly, and cautiously, await all the above, there is guaranteed good news this weekend. With it being the last Sunday of March, we welcome British Summer Time as the clocks go forward 1 hour, giving us back our much-missed lighter evenings.”