It’s going to be a busy week for investors, with a Federal Reserve meeting, the latest U.S. employment report, and Apple results that may set the tone for equities and bonds for the rest of the year. Here’s everything you need to know to kick off your week.
1/Federal Reserve meeting
Investors will be watching the Federal Reserve’s policy meeting on Wednesday, eager to hear officials’ perspectives on the status of the economy and the forecast for interest rates.
Most investors believe the Fed has stopped tightening after Chair Jerome Powell stated that higher long-term rates lower the need for additional rate hikes, while others anticipate another boost will occur when the Fed meets again in December.
Any signs that the Fed wants to hold rates near current levels into next year might boost bets on future rises in Treasury yields, which have risen to their highest levels in more than 15 years, contributing to a severe sell-off in the S& 500.
The index has dropped more than 10% since reaching a year high in late July, but it is still up about 8% year to date.
2/Nonfarm payrolls data
The nonfarm payrolls report for October will be the most important piece of economic data this week. Following a record-breaking 336,000 job gains in September, experts predict more moderate job growth of 182,000, which is still consistent with a healthy labor market.
The unemployment rate is predicted to stay at 3.8%, while pay growth is expected to slow to 4% year on year, a post-pandemic low. This might strengthen the Fed’s assessment that price pressures are moderating and that interest rates do not need to be raised further.
Ahead of Friday’s report, market players will be searching for evidence that pay growth is slowing in the third quarter on Tuesday.
3/Earnings
Apple (NASDAQ: AAPL) leads the way in what is expected to be another busy week of corporate results in the United States, with the iPhone manufacturer reporting on Thursday.
those of Apple, the world’s most valuable corporation, have helped propel equity indexes up this year, as have those of other megacap U.S. tech and growth companies.
The third quarter earnings season has seen several Big Tech names disappoint, with shares of Alphabet (NASDAQ: GOOGL) and Tesla (NASDAQ: TSLA) falling following their respective reports. The Nasdaq 100 index, which is heavily weighted toward technology, is down 11% from its peak but is still up about 30% year to date.
Other firms scheduled to report include McDonald’s (NYSE: MCD) on Monday, Caterpillar (NYSE: CAT) and Pfizer (NYSE: PFE) on Tuesday, Mondelez (NASDAQ: MDLZ) on Wednesday, and Starbucks (NASDAQ: SBUX) and Eli Lilly (NYSE: LLY) on Thursday.
4/Bank of England
The Bank of England will convene its last meeting of the year on Thursday, where policymakers will have to decide whether to keep raising interest rates following a 14-hike streak.
Investors predict the Bank of England to retain interest rates at a 15-year high of 5.25% while leaving the door open to additional rises if required. Policymakers are also anticipated to repeat that interest rates will need to remain near present levels for some time, despite rising evidence that the economy is slowing.
The Bank of England will revise its quarterly predictions, which indicated 0.5% growth in both 2023 and 2024 in August. Governor Andrew Bailey had a “very subdued” view earlier this month.
5/Eurozone inflation and GDP
The European Central Bank maintained interest rates on hold on Thursday, following the sharpest rate rise pace on record, and will now be looking ahead to Tuesday’s inflation and GDP figures ahead of its final meeting of the year.
Even if rising energy costs continue to provide an upside risk, preliminary statistics on consumer price inflation show the headline rate decreasing to 3.2% in October, bringing it closer to the ECB’s 2% objective.
The Eurozone economy is forecast to decrease by 0.1% in the third quarter, for an annual rate of growth of only 0.2%, according to GDP figures released the same day.
On Thursday, ECB President Christine Lagarde hinted at continued policy stability and resisted rate cuts.
