June 19, 2024

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What do you know this week

What do you know this week

March has long been expected to be a pivotal month for the Fed.

And after the first two weeks of the month, central bank news making headlines for a year, next week what investors expected to be the main event finally arrived.

On Wednesday, the Fed will announce its latest monetary policy decision at 2pm ET, with Fed Chair Jerome Powell set to follow up that announcement with a press conference at 2:30pm ET. Along with its policy decision, the Fed will also publish updated projections for inflation, unemployment, economic growth, and interest rates for the rest of this year and beyond.

After Powell testified before the Senate Banking Committee on March 7 that the Fed was likely to raise interest rates “higher than previously expected” in response to stubborn inflation, investors were certain that the Fed would raise its benchmark interest rate target range by 2%. 0.50% on March 22nd.

Two days later, an emerging banking crisis overshadowed the Fed’s plans. By Sunday night, March 12th, the Federal Reserve was part of the government-led deposits through the US financial system. investors now split approx On whether the Federal Reserve will raise interest rates at all on Wednesday.

“We still expect the Fed to raise its policy rate by 25 basis points next week, but it also conveys a less aggressive anti-inflationary message than thought a few weeks ago with the aim of calming market anxiety,” wrote Bob Schwartz, chief economist at Oxford Economics. In a note to customers on Friday.

“While banking problems will certainly garner attention, we believe it is not a systemic problem, but rather a liquidity issue that the Federal Reserve can contain through its lending facility,” Schwartz added. “The alternative going forward will be the reaction in the financial markets, as maintaining financial stability is one of the Fed’s mandates.”

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FILE – Federal Reserve Chairman Jerome Powell speaks during a press conference Wednesday, December 14, 2022 at the Federal Reserve Building in Washington. As the chief regulator of Silicon Valley’s banks, the Fed is under fire from financial watchdogs and banking experts. (AP Photo/Jacquelyn Martin, File)

Last week, government officials, regulators, and private sector leaders in the banking world sought to stabilize the American financial system after the rapid collapse of the Silicon Valley bank and signature bank takeover.

The key development of the week came on Thursday afternoon when a consortium of 11 US banking giants announced it would shift about $30 billion in deposits to First Republic (FRC), which investors and regulators fear could be the next institution to fail.

Even with last week’s infusion of capital, First Republic shares lost more than 70%; On Friday alone the stock is down about 33%.

Amidst the flurry of news from the banking sector, major US stock indices ended the week mixed, with the Nasdaq Composite (^IXIC) up more than 4%, the S&P 500 (^GSPC) up 1.4%, and the Dow Jones Industrial Average. Average (^DJI) recording modest losses.

Financial stocks, however, were hit hard, with the KBW Bank Index (^KBX) down more than 14% for the week, while the KBW Bank Regional Index (^KRX) lost just over 9%. Since the beginning of March, these indicators have lost 27% and 17%, respectively.

Over the weekend, US investors kept their eyes on Europe as the latest report from the Financial Times indicated that UBS (UBS) is close to a deal to acquire Credit Suisse (CS) in a $1 billion deal that would value Credit Suisse value is about $0.27. per share. Credit Suisse shares closed in New York for the Friday session at $2.01.

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While developments from the Federal Reserve and the global banking world will remain the main focus for investors, few economic and earnings reports will attract attention throughout the week.

Existing home sales data released on Tuesday and Wednesday will provide a weekly update on mortgage applications readings on the housing sector, which has been an unexpected beneficiary of the banking crisis given the collapse of Treasury yields and the resulting drop in mortgage rates.

Investors will also be closely watching Thursday morning’s reading of services and manufacturing activity from S&P Global.

On the earnings side, Foot Locker (FL) will report results on Monday, Nike (NKE) on Tuesday, and Darden Restaurants (DRI) on Thursday will provide updates on the US consumer situation.

Economic calendar

Monday: There is no notable data for the release.

Tuesday: Existing Home Sales, Feb

WednesdayMBA mortgage applications; Federal Reserve monetary policy decision

ThursdayUnemployment claims rates; New Home Sales, February; Kansas City Fed Manufacturing Index

Friday: Durable Goods Orders, Feb. US S&P Flash Composite PMI

Earnings calendar

Monday: Foot Locker (FL), Pinduoduo (PDD)

Tuesday: Nike (NKE), GameStop (GME), Tencent Music (TME), AAR Corp. (AIR)

Wednesday: Primary Outlet (OLLI), Chewy (CHWY), Petco (WOOF), Winnebago (WGO), Steelcase (SCS), Worthington Industries (WOR), KB Home (KBH)

Thursday: General Mills (GIS), Darden Restaurants (DRI), Accenture (ACN), FactSet (FDS)

Friday: No notable companies are expected to submit.

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