We have a busy week ahead of us, with Brexit set to take center stage once again. UK PM May will address Parliament on Tuesday and as she confirmed yesterday, no “meaningful vote” will take place. Thus, the spotlight will turn to Parliament’s vote on proposed amendments on Wednesday. In the US, Fed Chair Jerome Powell delivers his semiannual testimony before Congress on Tuesday and Wednesday. On the data front, we get the 1st estimate of the Q4 GDP, which was delayed due to the effects of the partial government shutdown. Canada’s and Eurozone’s CPIs are also coming out.
On Monday, the calendar is almost empty with no top-tier indicators due to be released.
On Tuesday, focus is likely to fall on Jerome Powell’s semiannual testimony to the US Congress. The Fed Chief will testify before the Senate Banking Committee, while he will deliver the same speech on Wednesday before the House Financial Services Committee. At the January FOMC meeting, the Committee switched to a patient stance with regards to future rate increase, also announcing that they are prepared to alter the size and composition of their balance sheet if needed. The minutes of that meeting revealed that all members prefer to announce soon plans to halt the balance-sheet normalization this year, while with regards to interest rates the views were split. Several members suggested that a hike would be necessary only if inflation accelerates higher than their baseline outlook, while several others argued that they see the case of raising rates later this year as appropriate, even if the economy evolves as expected.
So, having all this in mind, we believe that there is little new information we can get from Powell’s testimony. That said, we will look for clues as to which camp the Fed Chief belongs, namely whether he...
Read the full financial markets weekly outlook on JFD Research.