Key Economic Events to Watch This Week

In the last days of February, several key economic events will occur that will shape the market outlook for the near future. The focus this week will be on inflation news, the final act of earnings season, and policy decisions from central banks in both the US and Europe.

Let’s see below is a summary of important economic events scheduled for this week:

US Inflation Takes Center Stage

• The US will release its Personal Consumption Expenditures (PCE) price data for January on Thursday. This data reflects changes in the prices of goods and services consumers buy, offering an important glimpse into inflation trends.
• Recent economic reports, like consumer prices, producer prices, and employment numbers, suggest the US economy is holding up well despite higher interest rates. This has led some investors to delay their bets on the Federal Reserve cutting interest rates later this year.
• Economists predict a 0.3% increase in inflation for January, compared to 0.2% in December. A higher-than-expected reading could cause the Fed to postpone any potential rate cuts.

Earnings Season Winds Down

• While earnings season is nearing its end, several major retailers are still scheduled to report their results this week. This includes Lowe's, Macy's, TJX, and Best Buy. Their performance will provide valuable insights into consumer spending trends.
• As the focus shifts from earnings towards the monetary policy outlook, investors are keeping a close eye on the Fed's next move. Many believe a "soft landing" scenario would be ideal, where the Fed manages to control inflation without hindering economic growth.

Eurozone Inflation Update

• The Eurozone will also release closely watched inflation data on Friday, just ahead of the European Central Bank (ECB) meeting on March 7th.
• After reaching double digits in 2022, consumer price inflation in the Eurozone showed signs of slowing down, dropping to 2.8% in January from 2.9% in December. Economists forecast an annual inflation reading of 2.5% for February.
• The ECB has maintained record-high interest rates since last September, citing concerns about still-high wage growth and the need for continued control over inflation before considering any adjustments.

China's Economic Recovery Efforts

• China has been actively implementing measures to support its economic recovery, including lowering its benchmark mortgage rate and taking steps to revive its stock market.
• This week, we'll see PMI data (Purchasing Managers' Index) released on Friday, which provides an indication of activity levels in the manufacturing sector. Economists expect the official PMI to remain in declining territory, while the Caixin manufacturing index is predicted to hold steady.

Oil Prices: A Balancing Act

• Oil prices experienced a decline of nearly 3% last Friday and fell throughout the week, following comments from a US central bank official suggesting potential delays in interest rate cuts. This raised concerns about slower economic growth and reduced demand for oil.

However, healthy fuel demand and ongoing supply concerns could lead to a rebound in oil prices in the coming days.

Good Luck!