This past week was again marred by increased turbulence in the stock markets, with Deutsche Bank (DB), Germany’s leading lender and one of the world’s 30 systemically important banks, coming under fire. Although the markets seem to have calmed down about DB, mainly thanks to the strong backing by German officials, there’s certainly more volatility ahead, as confidence remains fragile. In the U.S., markets were reassured by the assessment that the disinflationary effects stemming from banking sector troubles will not only allow the Federal Reserve to stop increasing rates but may permit rate cuts later this year.
This week we’ll see a number of important reports published. It’s worth watching for the following economic news items, as all of them can prove to be major market movers. For a full listing of all upcoming economic events, check out TipRanks Economic Calendar.
March’s Consumer Confidence – Tuesday, 3/28 – The Conference Board’s indicator of the level of confidence that consumers have in economic activity is expected to decline to 101 from February’s 102.9. This is a leading indicator, as it can predict consumer spending, which plays a major role in overall economic activity. Therefore, an upward surprise can boost stocks, while a lower-than-expected reading can weigh on markets’ sentiment.
Q4 2022 GDP – Thursday, 3/30 – The Bureau of Economic Analysis (BEA) will release its final estimate of the real U.S. GDP change for Q4 2022. The final reading is expected to be in line with the previous estimate of annualized GDP growth of 2.7%, down from Q3’s 3.2%. Although the report reflects the state of the economy as it was in the previous quarter and isn’t forward-looking, a deviation from previous estimates can affect the stock market’s sentiment.
February’s Core PCE – Friday, 3/31 – Core Personal Consumption Expenditures is the average amount of money that consumers spend in a month, excluding spending on seasonally volatile products such as food and energy. The expectations are of a decline to 4.4% year-on-year from January’s 4.7%. Core PCE is the Federal Reserve’s preferred inflation gauge and one of the main indicators of the success of its efforts to tame inflation. Thus, a higher-than-expected reading may reverse the market’s bets of an upcoming pause in rate increases. On the other hand, if Core PCE eases as expected or more, it may spur another rally on hopes of a less restrictive Fed policy.
