Investors will be attentive this week to the meetings of the European Central Bank (ECB) with the Bank of Japan (BoJ) and the Bank of Canada, where the entities will make decisions about the future of monetary policy. In addition to this appointment, the direction of the markets will be marked these days by data on consumer confidence in Germany, the PMI in the eurozone or the unemployment rate in Spain.
This Monday the 22nd, the latest survey on consumer confidence in Spain is expected to be made public. In France, the week will begin with a 3, 6 and 12 month debt auction. The following day will be marked by the publication of data on the public sector’s net financing needs in the United Kingdom for December and the level of consumer confidence in the euro zone.
On the third day of the week, however, information will be released on the latest reading of the Purchasing Managers’ Index (PMI) for January in several European countries, an indicator that the markets will be paying attention to that day. Specifically, on Wednesday it will be possible to know what the level of activity is in the private sector of France, Germany and the United Kingdom, but also the euro zone as a whole.
No rate cut expected until summer in Europe
Without a doubt, the most anticipated thing of the week by investors will once again be the meeting of the European Central Bank (ECB) on monetary policy after this week the president of the organization, Christine Lagarde, announced that the start of rate cuts It could be delayed until summer, which has added uncertainty to the markets.
Senior associate analyst at Welcome Asset Management Fernando Gómez de Barreda has explained to EFE that the expectations of rate cuts starting last November with more controlled inflation data are beginning to fade.
He has highlighted that while the market wants to see rate cuts, central bankers are pouring “cold water” so that monetary policies take effect and by the end of the year they will begin to see “more forceful” drops. Thursday will also be the turn of Spain’s annual producer price index (PPI), this month’s IFO business confidence index in Germany and job seekers in France.
The IFO survey will predictably show the fragile economic situation presented by the “European locomotive”, as highlighted by Singular Bank analysts. In Europe, the week will conclude with the GfK consumer confidence index for January in the United Kingdom and the unemployment rate in Spain for the fourth quarter. In the business field, the presentation of results from Logitech, Nokia, Volvo and Audax Renovables stands out.
The week in markets outside Europe
In the US, the week will begin with the publication of the main index, followed a day later, on Tuesday, by the publication of the Reedbook retail sales index and the Richmond manufacturing index. On Tuesday the 23rd, the holding of a two-year public debt auction stands out in the US.
Gómez de Barreda referred to the debt auctions that will be held that week in France, the United Kingdom and the US, and specifically highlighted the two-year auction in the latter country, which he said was trading above the of ten years, which is called an inverted curve because a recession was anticipated.
On Wednesday the 24th, investors will be paying attention to the mortgage market index, the PMI and IEA oil inventories, while on Thursday the highlights in the US will be the renewals of unemployment benefits, sales of Housing, Chicago Fed national activity, building permits, and real consumer spending. The Bank of Canada (BoC) monetary policy meeting will also be held on Wednesday. On the last day of the week, the prices of personal consumption expenditure, the PCE price index and real personal consumption for December will be known.
In the Asia-Pacific region, in China the highlight will be the publication this Monday of the PBoC’s prime lending rate, while in Japan, interest is focused on the BoJ’s decision on interest rates on Tuesday and the underlying CPI. On Wednesday the trade balance for December and the manufacturing and services sector PMI will be known, and on Thursday foreign investment in Japanese stocks. Japan’s CPI and monetary policy meeting minutes will be released on Friday.
