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Economic calendar: Is the bull market over?

Summary:

  • Riksbank decision on Wednesday morning
  • US inflation data scheduled for release on Wednesday
  • UK data to take the stage on Tuesday and Friday

Suddenly all the typical focus on macroeconomic reports and central bank meetings has lost some of its appeal as traders gaze at equity indices wondering if the 9-year old bull market is over. Because it wasn’t reports or events that caused this storm it is unlikely that typical calendar events will be decisive in days to come. However, one publication will draw an attention and it’s US inflation. We also highlight UK data and Riksbank meeting in days to come.

US CPI data (Wednesday, 1:30pm GMT)

An unexpected rise in US inflation is possible the worst thing that could happen to equity markets these days. Recall that it was a solid NFP report that intensified a melt-down on Wall Street. It showed an acceleration in wage growth to 2.9% y/y and caused a spike in bond yields, making it clear that an era of easy money was over. US inflation has been moderate so far but any pick-up could intimidate investors even more so they will be watching the data very closely. The consensus sees headline and core inflation at the December levels of 2.1 and 1.8% y/y respectively. Affected markets: US30, EURUSD.

UK CPI (Tuesday, 9:30am GMT) and retail sales (Friday, 9:30am GMT) data

The Bank of England chose to ignore a streak of weaker domestic data and provided a strong signal that interest rates would need to go up fairly soon. One of the chief reasons behind this stance is elevated inflation so traders will be looking towards the data anxiously. Retail sales release is important as well as domestic demand has weakened somewhat. Affected markets: GBPUSD, UK100.

Riksbank decision (Wednesday, 8:30am GMT)

The Swedish krona has been struggling for a long time (at least against the euro) since the Riksbank hold the second lowest rates in the World (just behind the SNB). However, this is bound to change as the Banks prepares markets for the first hike this year, even amid a lack of such move from the ECB. It’s not going to to take place at this meeting but if Riksbank stays the course, it could buoy the outlook for the SEK. Affected markets: USDSEK, EURSEK.

 

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