RISING, AGAIN
Last week, stock markets rose, supported by continued positive sentiment around AI and its potential to boost corporate profits, as well as expectations of lower interest rates later this year.
Bond yields fell after the Fed suggested it could cut its policy rate in the first half of 2024. The central bank also upgraded its growth forecasts and expects inflation to remain controlled.
This week, the economic data calendar is light but US durable goods orders and German consumer confidence (both released tomorrow) may be of note. If Friday's release of the Fed's preferred inflation measure for February slows, this would further support the case for lower interest rates.
Last week, equity markets were lifted by continued positive sentiment around tech stocks and expectations of lower interest rates following the Fed's policy meeting on Wednesday.
The Fed's meeting was seen as confirming rate cuts in the first half of this year. The central bank upgraded its growth forecasts, but inflation is expected to remain controlled and this is set to allow for a lowering of its key policy rate.
Global PMI data, which measures business sentiment, activity and expectations, overall improved in March in both the manufacturing and services sectors. The Eurozone composite PMI (manufacturing and services) remained in contractionary territory, but rose for a fifth consecutive month. The US was mixed, with an improvement in manufacturing and a deterioration in services.
The Fed kept its interest rate projection for end-2024 unchanged and the interest rate market's expectations are in line with this. The Fed median projection is for three 25bps rate cuts this year, bringing the key rate down to 4.6%.
Bond yields fell (bond prices rise as bond yields fall) last week on the back of expected rate reductions from the Fed.
This week, the economic data calendar is light but US durable goods orders and German consumer confidence (both released tomorrow) may be of note. If Friday's release of the Fed's preferred inflation measure for February slows, this would further support the case for lower interest rates.
Tue 26th
US - Durable goods, consumer confidence
Germany - Gfk consumer confidence
Thu 28th
US - Initial jobless claims
Germany - Retail sales, labour market data
Fri 29th
US - Personal Consumption Expenditures (PCE) inflation
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.