Weekly Market Outlook 2/9
47 at it again
Hello traders,
Quick recap of last week:
Moving on,
Financial markets are gearing up for a busy week packed with high-impact economic data, Federal Reserve testimony, and key bond auctions. With inflation remaining a central concern and recession fears lingering, investors will closely monitor the upcoming events to gauge the trajectory of monetary policy and economic resilience.
Key Events to Watch
1. Federal Reserve Chair Jerome Powell’s Testimony (Tuesday & Wednesday)
Chair Powell’s semiannual testimony before Congress on Tuesday and Wednesday will be a focal point for markets. Investors will look for insights into the Fed’s assessment of inflation trends, labor market strength, and potential rate adjustments. Powell’s comments could set the tone for risk sentiment throughout the week.
2. Inflation Data (Wednesday)
The January Consumer Price Index (CPI) report is expected to show a 0.3% month-over-month increase, with year-over-year inflation forecast to ease slightly to 2.9% from 3.0% in December. Core CPI, which excludes volatile food and energy prices, is also projected to rise by 0.3%. These figures will provide critical clues about whether inflationary pressures are cooling enough to justify a pause in rate hikes.
3. Labor Market Update (Thursday)
Initial jobless claims for the week are forecast at 219,000, a slight uptick from previous levels but still indicative of a tight labor market. Persistent strength in employment could complicate the Fed’s efforts to rein in inflation without triggering a slowdown.4. Producer Price Index (PPI) Data (Thursday)
January’s PPI is expected to rise by 0.2% month-over-month, signaling continued cost pressures at the wholesale level. This data will complement CPI figures in shaping inflation expectations.
5. Retail Sales Data (Friday)
January retail sales are anticipated to grow by 0.4% month-over-month for both core and overall categories, suggesting consumer spending remains resilient despite higher borrowing costs. Strong retail sales could reinforce optimism about economic growth while keeping inflation concerns alive.
6. Bond Auctions (Wednesday & Thursday)
The U.S. Treasury will hold auctions for 10-year notes on Wednesday and 30-year bonds on Thursday, with yields forecast at 4.680% and 4.913%, respectively. These auctions will test investor demand amid ongoing uncertainty about the Fed’s next moves.
7. Crude Oil Inventories (Wednesday)
Weekly crude oil inventory data will be released on Wednesday, with analysts expecting a stockpile of approximately 8.664 million barrels. This report could influence energy markets as traders assess supply-demand dynamics.
Market Sentiment and Outlook
Equity markets ended last week on a cautious note as investors weighed mixed earnings results and geopolitical risks. The S&P 500 closed slightly lower but remains near its recent highs, supported by optimism around moderating inflation and robust corporate profits.Bond yields have been volatile ahead of this week’s events, with the 10-year Treasury yield hovering around 4.25%. The outcome of the CPI report and Powell’s testimony could significantly impact bond markets and broader risk assets.With inflation data, Fed commentary, labor market updates, and retail sales all converging this week, markets are poised for heightened volatility as traders seek clarity on the economic outlook and monetary policy trajectory.