All Eyes on US CPI Inflation Report
The collapse of SVB and Signature banks in the US and the US CPI inflation report due to be published later today draw investors’ attention. Some market analysts suggest that the US Federal Reserve could pause its monetary policy tightening plan to avoid the start of a new banking crisis.
Data released by the Office for National Statistics (ONS) earlier today showed that the UK’s unemployment rate fell to 3.7% in the three months to January. Economists pointed out that job vacancies fell for the eighth month in a row as companies blamed economic pressures for holding back on hiring new staff.
US CPI inflation report to provide insight into the economy
The US Bureau of Labour Statistics (BLS) will publish the February CPI inflation report later today. Economists forecast headline CPI inflation to come in at 6% on an annualised basis and 0.4% on a month-to-month basis. It should be noted that inflation came in at 6.4% in January, surpassing analysts’ expectations.
CME FedWatch Tool indicates rate hike by the Fed
The CME Group’s FedWatch Tool indicated on Monday a 72% probability of an increase of 25 basis points in the upcoming Fed board meeting, bringing the benchmark rate to 4.75%-5.00%. However, market analysts see a U-turn to the tune of 75 basis points of reductions by December 2023 from the March peak.
Goldman Sachs: Don’t expect a rate hike by the Fed in March
In a report to clients, Goldman Sachs (GS) analysts said that they don’t expect the Fed to proceed with hiking interest rates in its upcoming board meeting on March 22nd. “In light of the stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its next meeting on March 22.” However, they did note that they still expect to see 0.25% rate hikes in May, June and July.
US President Joe Biden vows to calm fears
Speaking to reporters in Washington, Joe Biden said that deposits and the US banking system are safe. The US President noted: “I’m going to ask Congress and the banking regulators to strengthen the rules of the banks to make it less likely that this kind of bank failure would happen again.” He also stressed that the SVB rescue package wouldn’t affect taxpayers and added that the bank’s management would be fired while investors wouldn’t be protected.
China retail sales report due on Wednesday
The Chinese National Bureau of Statistics (NBS) is expected to publish data regarding January and February retail sales. Market analysts suggest that retail sales increased by 3.5%, on an annualised basis, in the first two months of 2023.
Bloomberg reported that the NBS head told members of the National People’s Congress that economic data for January and February, including industrial output and retail sales, have shown notable improvement.
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