© Reuters. What to watch next week around the world: The Fed’s interest rate hike is more difficult to predict Can non-farm payrolls clear the fog of interest rate path?
July 1 news from the Financial Associated Press (edited by Niu Zhanlin)Although the Federal Reserve officials made many hawkish remarks, they did not have a major impact on the market. US stocks continued to soar, and the Nasdaq 100 Index achieved the best first-half performance in history. Looking ahead to next week, investors are most concerned about the minutes of the Federal Reserve’s latest monetary policy meeting and the June non-farm payrolls data.
Federal Reserve Chairman Jerome Powell said this week that while officials decided not to raise interest rates this month to slow down the pace of rate hikes, the Fed is likely to raise interest rates further, or even to rule out consecutive rate hikes, and we need to figure out a way forward . This also means that the next phase of interest rate hikes will be more difficult to predict.
Not only is Powell increasingly hawkish, other Fed officials are also changing their forecasts to reflect the prospect that they are preparing to raise interest rates two times before the end of the year. The minutes of the monetary policy meeting next week should give us a glimpse of what the dovish officials in the FOMC are thinking, as well as the differences that exist among officials.
For Powell, the job of convincing the market is somewhat difficult, as the threat of inflation in the US is currently much smaller than that in the UK and the euro zone. However, the Fed is unlikely to be satisfied unless it sees clear signs that labor market tensions are easing and wage growth is slowing.
The U.S. labor market was tighter than expected after data showed that non-farm payrolls jumped by 339,000 in May, while investors expected the data to be 200,000 in June. If it far exceeds market expectations again, the probability of raising interest rates in July should be a certainty, and the Fed’s interest rate path will become clearer.
Faced with extremely strong economic data, investors are in a dilemma. On the one hand, solid economic data means that the economy is more resilient, but on the other hand, it also gives the Fed the courage to continue raising interest rates.
“The performance of the labor market will likely be an important catalyst for the direction of markets and monetary policy,” said Omar Aguilar, chief executive of Charles Schwab Asset Management.
Next week, U.S. stocks will enter the second half of the market. Although they have come out of an enviable rally, some indicators show that people’s optimism about the stock market is still growing. According to a survey by the American Association of Individual Investors, the optimism of American investors has been higher than the historical average level for four consecutive weeks, while the US stock positioning indicator shows that investors have recently increased their exposure to the stock market.
In addition, the Reserve Bank of Australia will release its interest rate decision next Tuesday, and the urgency for policymakers to raise interest rates for the third time in a row has eased after the CPI data in May slowed sharply. The central bank paused raising rates in April, but resumed raising rates in May and June.
Overview of important events for the next week:
Monday (July 3):Caixin manufacturing PMI in China in June, monthly CPI rate in Switzerland in June, final manufacturing PMI in the Eurozone in June, final manufacturing PMI in Germany in June, manufacturing PMI in the United Kingdom in June, ISM manufacturing PMI in the United States in June, The monthly rate of construction spending in the United States in May
Tuesday (July 4):Australia to July 4th RBA interest rate decision, Germany’s seasonally adjusted trade balance in May
Wednesday (July 5):China’s June Caixin service industry PMI, Eurozone’s June service industry PMI final value, Eurozone’s May PPI monthly rate, and U.S. May’s factory order monthly rate
Thursday (July 6):API crude oil inventories in the week from June 30 in the United States, the monthly rate of retail sales in the euro zone in May, the number of layoffs of challenger companies in the United States in June, the number of ADP employment in the United States in June, and the number of initial jobless claims in the week from July 1 in the United States , U.S. trade balance in May, U.S. JOLTs job vacancies in May, Federal Reserve releases monetary policy meeting minutes, New York Fed President Williams participates in discussions at CEBRA 2023 annual meeting
Friday (7 July):Monthly rate of industrial output after seasonal adjustment in Germany in May, trade account in France in May, foreign exchange reserves in China in June, employment in Canada in June, unemployment rate in the United States in June, non-agricultural employment in the United States in June
2023-07-01 00:09:08
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