FED and Giant Reports!
The week ahead will be about FED monetary policy meeting, announcement, FED Chair speech, and market expectations. Last week Chinese central bank has reduced the prime rates by 10 bp, and BoJ also continued its dovish policies, therefore it is the FED decisions that can clarify the market conditions. We should not forget also about the PMI data from the most developed economies, Australian CPI, US GDP, PCE, and giants' Earnings reports.
PMI Day - Monday
The week will start with Purchasing Managers Indexes data from the most developed economies. That will be the first PMI data of 2022 and will be about the January developments and sentiment. December we had a panic in the market about the new variant of Coronavirus, but in January we learned that it is not as dangerous as earlier expectations, therefore the weakness that we saw in December numbers, can change to the positive attitude. Stock markets especially in the EU expected to get the advantage of these positive expected data.
FED monetary policy meeting - Wednesday
FED chair Powell's and Lael Brainard's vice-chair nomination hearing gave us a brighter idea of the possible FOMC members' decisions about the interest rate and balance sheet. On the other hand, the past two week's initial jobless claims tell us that a bit of caution also must be in our expectations. We also need to be aware that FED members' speeches increased the market expectations for more hawkish policies, therefore fewer hawkish decisions must be read as positive signals for stock markets. We cannot say what will be the market reaction. But we can say that if market participants accept it as a Hawkish, it will hold the bears in the market for a bit longer time, but accepting the announcement as a dovish tone, will change the market direction.
Bank of Canada's meeting - Wednesday
On the same day as FED, the Bank of Canada also will hold the meeting. About Canada, with great improvements in the labor market, GDP, Industrial and Manufacturing productions, many market participants and investors believe that taking more tightening steps is likely. However, the second guess also is that BOC will choose the wait and see policy to make sure that more tightening policies will not be going to panic the financial markets, and it is more likely to see this policy. Therefore, it does not make much sense to expect the Canadian dollar to be seen in the stronger levels.
US Personal Income & Spending - Friday
Friday we will have the US consumer price and spending data. Prices are expected to continue to rise in December and forecast the PCE deflator rose 0.5%, which means a 4.8% annual rate, and it will be the highest in nearly 40 years. For the personal income, the expectation is for a 0.5% increase, while spending is estimated to decline by 0.4%. After a sharp income increase in the past months, which had caused annoyance among many employers, now it can also be read as a sign that inflation will slow down in the coming months. This week, market participants will be focusing on FED decisions, therefore these data will not be that much impressive in the markets.
The giants Earnings
In the first two weeks of earnings reports, we had very mixed data, especially from the banking, airline, and travel sectors. This week also we will have more important reports to be watched closely. Monday the IBM's report will be important. Tuesday will be much busy day with Microsoft, J&J, Verison, Nextra, and 3M reports. Wednesday other giants of the market will come to report, including Tesla, Boeing, and AT&T. Thursday Apple, in line with Visa, Mastercard, and McDonald’s will be reporting and finally, on Friday, Chevron and Caterpillar will be in the spotlight.
