Several top Fed officials are set to speak this week, including Chair Powell, Fed Vice Chair Kaplan, and Fed Vice Chair Rosengren. These speeches will likely dominate trading in Treasuries and set the direction of interest rates for the week. However, there will be plenty of key economic reports that will also be released. Among the most important reports to watch this week are the Federal Funds Rate, the jobs market in the United Kingdom, and the Purchasing Managers Index (PMI) readings for the United Kingdom, Japan, the Eurozone, and the U.S.
Fed officials are set to speak about monetary policy this week, but they will also focus on the economy. They'll also likely give hints as to when the Fed will begin to start reducing its balance sheet. The minutes from the most recent Fed meeting will be released on Wednesday. They could offer a shot in the arm for the US dollar bulls. However, if they feel that conditions have loosened too much, they could change their tone and say that they would like to see some action to cool the economy.
Fed Chair Powell will speak on Friday. In his remarks, he will highlight the central bank's commitment to fighting inflation. He also outlined the path for the Fed to wind down its asset purchasing facility next summer. He said that a rate hike "was just the beginning" and suggested that it was possible for inflation to return to its long-term average. He also warned against a continued softening of the labor market.
Other Fed officials will speak this week, including FRBNY President William Dudley, Minneapolis Fed President Neel Kashkari, and Chicago Fed President Charles Evans. These speeches will also be important in determining the direction of the market this week.
Chicago Fed President Charles Evans argued that the central bank needs to raise interest rates at least another percentage point this year. He also noted that the unemployment rate would rise to 4.4% next year. However, he said that he didn't see "recession-like jobless numbers" in the near future.
New York Fed President John Williams also began the week with a speech. He said that while the economy remains strong, the risks associated with further rate hikes are substantial. He also said that the Fed should be prepared to pause if the Fed Funds Rate reaches 4 percent. He warned that inflation is expected to remain on the rise for the next several years. He also said that he expects short-term yields to continue to move higher.
Fed officials will also speak about the economy, with a particular emphasis on consumer spending and the pace of holiday shopping. Consumer inflation has increased since September. Several economists believe that the economy is slowing down, and they've pointed to the unemployment rate as a potential indicator of recession. This is a topic of great concern to the Fed, which wants to avoid the possibility of recession.
There will also be a variety of economic reports released this week, including the jobs market in the United Kingdom, the University of Michigan consumer sentiment index, and the Purchasing Manager Index (PMI) readings for the U.S., Japan, the Eurozone, and the UK. The jobs market is due to be released on Tuesday, while the Purchasing Manager Index (PMI) is due on Wednesday and Friday.