There are a number of key events this week but inflation and the path in which the Fed is tightening remains at the forefront. This has literally taken the stability and liquidity out of the market which in turn has made other situations, i.e. the trade war, have a greater and more immediate impact on market conditions. CPI, a leading inflation indicator, is due Wednesday morning at 7:30 a.m. Central.
This is one busy week and the main event, Friday’s jobs report, is set to close things out at 7:30 am CT. The focus has shifted away from job creation and is now on wages. While Non-farm Payroll takes the cake, this is a potent combination throughout the week. Kicking things off is ISM Manufacturing on Monday at 9:00 a.m. Central.
Federal Reserve Chairman Jerome Powell went to Wall Street and was not happy enough to enact whatever rate hikes the Fed had planned for this year, and markets were told to count on three more in 2019. Nobody knows what tomorrow or next month will bring, let alone next year. I came away thinking this guy is trying to pop the stock market bubble.
U.S. futures are coming under pressure once again ahead of the open on Thursday, as investors continue to display an anxiety about the path of interest rates against a backdrop of escalating trade conflicts.
The U.S. dollar is mixed against major pairs ahead of the March Federal Open Market Committee (FOMC) meeting. The Fed is expected to deliver its fist interest rate lift under Chair Jerome Powell. The Fed will publish its rate statement on Wednesday, March 21 at 2:00 p.m. Eastern. Strong data has fuelled the dollar revival but the drama in the White House and tariff uncertainty are keeping the currency down against safe haven currencies.
Equity markets are coming out of a mixed session sandwiched in between critical economic indicators; while the E-mini S&P 500 was unchanged yesterday, the Nasdaq gained 0.5% and the Dow lost 0.5%. Gold surprisingly lost ground overnight, yesterday’s session should have been constructive enough to keep the sellers at bay through CPI data at 7:30 a.m. Central.
A reconstituted Federal Reserve under new leadership will face tough challenges in the year ahead. Monetary normalization is well underway, with the Federal Open Market Committee (FOMC) having raised the Federal funds rate five times since it left the zero lower bound two years ago and started shrinking the bloated balance sheet built up through three rounds of bond buying.