After last Friday's correction, investors are likely to continue to apply the handbrake in the new trading week. Hawkish statements by a Fed representative have recently revived interest rate concerns. Last Friday's US labor market data also raised doubts about an imminent turnaround in interest rates. In addition to new inflation data from the United States, investors are looking ahead to the ECB meeting on Thursday. Meanwhile, geopolitical risks could once again attract increased attention. Iran had announced a retaliatory strike on Israel following the airstrike on one of its embassy buildings in Syria.
US labor market data underpins delay in interest rate cuts
At 303,000 jobs, job growth in the United States was significantly higher than expected (200,000). The unemployment rate also fell to 3.8% after 3.9% in the previous month. In this context, the strength of the US labor market is dampening the hopes of interest rate cuts.
Last week, Neel Kashkari from the Fed in Minneapolis even put forward the scenario that the US central bank might not turn the interest rate screws at all in 2024. In a speech at Standford University, Jerome Powell was also cautious about a turnaround in interest rates. The financial markets are still speculating on a first cut in June.
Fed speeches in focus - core rate of inflation likely to fall
After an eventful trading week overall, the next five days are likely to be somewhat quieter from the perspective of the economic data calendar, even if the US inflation data in the middle of the week is a real high-caliber event.
In the night from Monday to Tuesday, a speech by Neel Kashkari is likely to attract interest (01:00).
The publication of new US consumer prices at 14:30 on Wednesday should cast its shadow. The core inflation rate is expected to rise by 3.7% after 3.8% in February (compared to the same month last year). These figures serve as a guideline for the US Federal Reserve.
Consumer prices, including energy and food, are likely to have risen by 3.4% in the above-mentioned period, which is significantly more than in the previous month (3.2%).
Speeches by Fed representatives Bowman (14:45) and Goolsbee (Chicago Fed/ 18:45) should also attract interest.
The transcripts of the latest Fed meeting (FOMC minutes) will be reviewed at 20:00 for monetary policy clues.
ECB meeting could also be heard in the USA - US price data provide an indication of inflation trends
The ECB's key interest rate decision on Thursday (14:15) is unlikely to come as a major surprise. A status quo of the current key interest rate level of 4.5 percent is expected. The subsequent press conference with ECB President Christine Lagarde is likely to be more informative. Investors in the eurozone are also betting on a first interest rate cut in June.
In the meantime, the development of US producer prices (PPI data) should provide some movement. An increase of 0.3% is expected compared to the previous month after 0.6% in February.
Monetary policy stimuli could follow in the afternoon from Williams (New York Fed/ 2:45 pm), Collins (6:00 pm) and Bostic (Atlanta Fed/ 7:30 pm).
The trading week is rounded off by new consumer confidence figures from Michigan (16:00) and speeches by Bostic (20:30) and Daly (San Francisco Fed/ 21:30).
