Major events of the upcoming week
The situation on the financial markets remains very volatile. The wave of growth is now and then replaced by rather strong sales and flight from risky assets. Investors are still not sure about the prospects for the development of the global economy, despite some success in the fight against COVID-19 and the adaptation of local economies to new operating conditions. The greatest uncertainty for investors is represented by the prospects for the development of the US economy, which continues to experience serious difficulties in almost all areas.
A sharp rise in the yield of US Treasuries at the end of last week provoked a large-scale fixation of long positions on stock exchanges. Investors fear that against the backdrop of rising inflationary pressures, the Fed will be forced to begin tightening monetary policy. At the same time, the market ignores all statements of the FRS representatives, who speak about a long period of low interest rates in the USA and a new approach to inflation control.
Obviously, after Friday's sell-off at the start of a new trading week, investors will be closely monitoring changes in the yield curve of the US Treasuries. But, most likely, the volatility for this instrument will significantly decrease and gradually traders will again turn their attention to the data of macroeconomic statistics. Moreover, we are in for a very busy news week with a large flow of important statistical information that can greatly affect the dynamics of the market movement.
Below we will look at three of the most significant events of the coming days.
USA - ISM Manufacturing PMI
Despite ongoing challenges, the US manufacturing sector continues to adjust to the new business environment and is gradually recovering from the COVID-19 crisis. Quarantine is still holding back the pace of recovery, but the ISM PMI has held steady above 50 over the past 8 months, indicating increased manufacturing activity and expansion in production.
On Monday, experts predict a slight decline in the PMI index from 58.7 to 58.6 points.
Australia - Reserve Bank of Australia meeting
Following global trends, the Reserve Bank of Australia has refrained from adjusting monetary policy over the past months. Australia's economy is gradually recovering from the pandemic crisis, but still needs stimulus. Obviously, in this situation, the regulator will continue to implement a soft monetary policy, keeping the interest rate at a low level.
Most likely, following the meeting on Tuesday, the RBA will keep the interest rate and the volume of the asset repurchase program unchanged.
USA – Non-Farm Payrolls
The US labor market situation remains challenging. Despite all the efforts and active incentives, the rate of hiring of new workers remains low due to the continuing uncertainty about the prospects for the US economy. Against this background, experts predict an increase in the unemployment rate in February from 6.3% to 6.4%. The growth rate of average wages is also expected to slow down from 5.4% to 5.1%. Positive changes are expected only for the number of people employed in the non-agricultural sector. The indicator is projected to grow from 49 thousand to 110 thousand.