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Week ahead: BOE and Fed meetings, UK public finances, Germany data

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Suban Abdulla
·4-min read
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Digital global business network connection and people walking in the city with technology design
Also key during the week will be a host of economic indicators referencing February. Photo: Getty

Focus will shift to the UK and the US in the coming days, as central banks in both jurisdictions will be under pressure when it comes to inflation and interest rates.

Rate-setters from the Federal Reserve (Fed) and the Bank of England (BoE) are due to meet to decided on policy on Wednesday and Thursday respectively.

While neither banks are expected to announce big policy changes, recent comments from policymakers, including BoE's Andy Haldane, will weigh on guidance regarding how to navigate the recent rise in government bond yields.

Also key during the week will be a host of economic indicators referencing February, starting with China's retail sales out on Monday, monthly US production and retail sales on Tuesday, ZEW economic sentiment index and French inflation data also on Tuesday.

Closing out the week, will be UK public sector net borrowing figures on the slate for Friday.

Developments over the weekend that may interest investors:

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UK: BoE rate meeting, public finances

UK's central bank is expected to keep its constructive forecast in place, as the vaccination programme picks up steam, with the pace poised to double in the coming weeks as more age groups get inoculated. This supports a positive economic outlook, especially after the UK slowly exits lockdown.

Experts at ING said that they "don’t expect" the BoE to "lean against the rising bond yields" next week.

"But with the market already pricing a close to one hike for 2022 and another one for 2023, the cautiously upbeat BoE message next week might be a modest positive for GBP, yet not a catalyst for some profound GBP gains."

But, the rising 10 gilt yields could be an area BoE pays attention to, especially considering the amounts of money the UK government is borrowing to fund its coronavirus response.

Friday, will see another important event on the economic calendar with public borrowing data for February in the spotlight.

Rightmove's (RMV.L) House Price Index is also due on Monday.

Key company results:

  • Ferguson (FERG.L) — half-year (Tuesday)

  • Greggs (GRG.L), Just Group (JUST.L)— finals (Tuesday)

  • Capita (CPI.L) — full-year (Wednesday)

  • Fevertree (FEVR.L), Gym Group (GYM.L), National Express (NEX.L), Premier Oil (PMO.L) — finals (Thursday)

  • Ocado (OCDO.L) — Q1 (Thursday)

US: Fed meeting, retail sales, industrial production

Federal Reserve Chair Jerome Powell listens during a Senate Banking Committee hearing on Capitol Hill, on December 1, 2020 in Washington,DC. (Photo by Al Drago / POOL / AFP) (Photo by AL DRAGO/POOL/AFP via Getty Images)
Federal Reserve Chair Jerome Powell. It will be interesting to see what the Fed will do if bond yields continue to spike, experts have predicted there could be a move to 1.8% in the coming weeks in the US 10-year yields. Photo: Al Drago / POOL / AFP via Getty Images

All eyes will be on the Fed and chair Jerome Powell this week after US president Joe Biden signed the long-awaited $1.9tn (£1.3tn) American rescue Plan, which will give individual American's their third stimulus checks worth $1,400.

So far, Powell has maintained lax about the upward march of bond yields, saying that the recent rise is a natural consequence of optimism over the chances of a strong economic rebound as the US economy reopens and another fiscal stimulus.

It will be interesting to see what the Fed will do if bond yields continue to spike, experts have predicted there could be a move to 1.8% in the coming weeks in the US 10-year yields.

"Particular attention is likely to be on Fed policymakers projections for future rate rises. If these are left unchanged than it can be assumed that the Fed is relaxed about the recent rise in long-term yields, however if some members bring their rate rise projections forward, then markets could well push long-term yields even higher," chief analyst at CMC Markets, Michael Hewson said.

There is also the Empire State manufacturing index on Monday and retail sales for February on Tuesday, while the other side of the meeting you’ve got the Philly Fed manufacturing index on Thursday

Eurozone: ZEW economic sentiment, French inflation, trade balance

FRANKFURT AM MAIN, GERMANY - MARCH 02: A trader sits in desk pods on the trading floor of the Frankfurt Stock Exchange of the Deutsche Boerse AG on March 2, 2020 in Frankfurt, Germany. Europe is braced for more fallout from the coronavirus as confirmed cases of Covid-19, the disease caused by the coronavirus, have reached at least 117 in Germany and are expected to continue rising.  (Photo by Thomas Lohnes/Getty Images)
Investors will also focus on Germany's DAX as its been hunting for a fresh all-time high, so investors will watch how Europe's biggest economy's bourse moves as the week goes on. Photo: Thomas Lohnes/Getty Images

With the region's central bank meeting for March out of the way, this week will see more economic data releases for the Eurozone.

The European Central Bank (ECB) announced on Thursday that it would step up its bond-buying programme to counter government debt sell-off, but left interest rates for the region unchanged.

Data wise, the region has the German ZEW economic sentiment index and French inflation readings on Tuesday, region-wide inflation figures on Wednesday, and the trade balance number on Thursday.

Investors will also focus on Germany's DAX (^GDAXI) as its been hunting for a fresh all-time high, so investors will watch how Europe's biggest economy's bourse moves as the week goes on.

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