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How many rate hikes are left in the tank? That’s the key question for traders this week as the Federal Reserve meeting gets underway. Whilst the Fed is expected to hike again, some market participants think this may be the moment to pause as the full effects of tightening can be assessed amid signs of slowing economic growth. The European Central Bank and Bank of England also hold key meetings. Meanwhile there are earnings from a slew of S&P 500 components, including the big tech names such as Apple, Amazon, Alphabet and Meta.  

Here are the week’s key events:

 

Monday

It’s a relatively quiet start to the week with German import prices and retail sales figures among the early highlights. Later in the session we get Japanese unemployment, industrial production and retail sales figures.

 

Tuesday

The Federal Open Market (FOMC) meeting gets underway, whilst traders will be watching China’s PMI data as the highlight in the Asian session, French consumer spending and flash GDP figures, and Germany’s CPI inflation print. Flash Eurozone GDP figures are due too, ahead of Canada’s latest GDP report. US consumer confidence and Chicago PMI data are among the highlights later in the day. It’s huge day for US earnings.

Earnings:  Caterpillar Inc (CAT), Exxon Mobil (XOM), General Motors (GM), McDonald's Corp (MCD), Pfizer (PFE), Spotify Technology (SPOT), Advanced Micro Devices (AMD), Amgen (AMGN), Mondelez (MDLZ), Snap Inc (SNAP).

 

Wednesday

It’s Fed day and an expected rate hike but a lot less certainty around whether the FOMC has any more plans to raise rates. Markets see a roughly 95% chance the Fed goes for another hike and roughly 80% likelihood it follows this with another 25bps hike in March. Beyond that the outlook is much less clear – only a one in three chance of another 25bps in May. The meeting and press conference will be crucial as Jay Powell either pushes back against the market pricing in dovishness or leans into the narrative that inflation has peaked a pause is warranted. EU flash CPI estimates will also be carefully watched.  

Earnings:  Meta Platforms (META), Novo Nordisk (NVO)

 

Thursday

A central bank double with both the Bank of England and European Central Bank in action. Both are expected to raise rates by 50bps but it’s less clear what sort of outlook they will offer markets. The ECB has been sending mixed messages lately following a hawkish shift in December. The BoE says markets are more in line with its thinking, but inflation is not coming down fast enough, leaving the door open for it to do more if it has to.

Earnings:  The Estee Lauder Companies (EL), Merck & Co (MRK), Takeda Pharmaceutical (TAK), Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Ford Motor Co (F), Qualcomm. (QCOM), Starbucks (SBUX)

 

Friday

US nonfarm payrolls rounds out the busiest week of the year. Nonfarm payrolls increased by 223,000 in December as the labour market remained resilient. The unemployment rate fell to 3.5%, whilst wage growth was below expectations, with average hourly earnings up 4.6% from a year ago, below the 5% estimate. The ISM Services PMI follows shortly after.

Earnings: Aon (AON) 

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