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Weekly Market Preview
Monday, Apr 22, 2024
The release of higher-than-expected US economic data, including the March jobs and consumer prices reports, prompted Federal Reserve members and their chairman to consider maintaining current monetary policy unchanged during the second quarter of the year. There is a consensus among members that there is no immediate need to cut interest rates. Consequently, this stance resulted in a decline in US bond prices and an increase in bond yields. Moreover, the US dollar saw gains due to the reduced likelihood of imminent interest rate cuts. Some members even hinted at the possibility of rate hikes. As a result, the stock market, particularly the S&P 500 index, witnessed a 5% decline over the past two weeks.
Looking ahead, investors are eagerly awaiting further insights into the performance of the US economy. The release of the first reading of the US GDP data for the first quarter of this year is highly anticipated, with expectations suggesting a potential slowdown in growth levels from 3.4% in the fourth quarter of last year to 2%. Additionally, attention will be on the US personal consumer spending index data for March. The YoY headline figure is expected to show an increase from 2.5% in February to 2.6% in March, attributed to recent energy price uptick. Any data surpassing expectations regarding growth and inflation levels could delay interest rate cuts until the end of the third quarter or even the beginning of the fourth quarter.
On another front, the Bank of Japan is scheduled to announce its interest rate decision this week. Expectations lean towards maintaining the current rates after emerging from negative levels in the last meeting. Market participants will closely monitor hints from the Japanese central bank regarding monetary policy for the upcoming period, particularly regarding the timing of potential rate adjustments throughout the current year.
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