Know that we have still been very silent these last days, we believe it’s pertinent that weekly, we indicate the news that is important to watch.
As described by Investing, it appears that the Federal Reserve’s comment that interest rate hikes could come earlier than expected will determine market sentiment this week and probably the next few months as market participants take in the sharp change in stance in their guidance on monetary policy.
As a result, the focus will be on Fed Chairman Jerome Powell’s appearance before Congress on Tuesday, as well as statements from several other Fed officials during the week.
Friday’s data on personal income and spending will also draw attention, especially the reading of the core PCE price index, the Fed’s favorite indicator of inflation. Equity markets showed a downward trend last week; Value stocks, in particular, took a hit, and it looks like this pattern will continue, at least in the short term.
In the UK, the Bank of England meets on Thursday, and markets will be on the lookout for new clues on rate hikes. Then here’s what you need to know to start your week.
According to Glassnode, from a macro perspective, there are remarkable similarities to the 2017 macro peak in regards to the balance of supply held by Long (blue) and Short (red) Term Holders. The chart below shows the relative supply held by each cohort and whether they are in profit (dark colours) or loss (light colours).
In accordance with the above, since the $ 64k top, Long-term holders own an additional 5.25% of the circulating supply, of which 1.5% of this is currently underwater (held at an unrealized loss). Then we can say that despite prices approaching the cost basis for many long-term holders, they continue to HODL on.
The Fed surprised the markets last week by talking about two possible interest rate hikes in 2023, earlier than the markets had anticipated, as well as noting that it was also getting to the point where it could start talking about the phasing out of its $ 120 billion monthly stimulus program.
The shift in outlook was noticeable when St. Louis Fed Chairman James Bullard said Friday that a move toward faster monetary policy tightening was a “natural” response to economic growth and increased economic growth inflation as the economy reactivates in the wake of the coronavirus pandemic.
The question of whether stronger-than-expected inflation would prompt the Fed to take action earlier was already looming over financial markets in the run-up to the monetary policy meeting.
Market participants will be on the lookout for statements from Fed Chairman Jerome Powell on Tuesday, during his appearance via satellite connection, on the Fed’s emergency loan programs and current policies before the Select Subcommittee of the House of Representatives on the coronavirus crisis.
In addition, several other Fed officials will appear during the week, and their remarks will also receive a lot of attention as markets look for new signals about the future direction of monetary policy.
New York Fed President John Williams and St. Louis Fed President James Bullard appeared Monday while Cleveland Fed President Loretta Mester and St. Louis Fed President Francisco, Mary Daly, will do it on Tuesday.
Other Fed appearances this week include those of Atlanta Fed Chairman Raphael Bostic and Boston Fed Chairman Eric Rosengren.
US stocks closed sharply lower on Friday, with the Dow and S&P 500 posting their worst weekly performances since late October and late February, respectively. The Nasdaq technology index also closed lower.
The falls were marked by a decline in the value of stocks, falling commodity prices, as well as a rebound in the dollar and US government bonds.
“I’m not surprised to see a slight sell-off in the market. Not surprising at all, given the strong streak we’ve been through over a very long period of time, to see some periods of profit-taking,” Tim Ghriskey, chief strategist, Inverness Counsel investment firm in New York, told Reuters.
Investors will pay close attention to economic data released this week for clues as to whether the recent surge in inflation — consumer prices accelerating in May at their fastest pace in nearly 13 years — continues.
Personal income and spending data for May will be released on Friday, including a reading of the core PCE price index, the Fed’s favorite gauge of inflation.
The economic agenda also includes reports on new and built home sales, durable goods orders, activity in the manufacturing and services sectors, and the weekly report on initial claims for unemployment benefits, which has raised great expectations, given the uneven recovery of the labor market.
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