Markets on the rise, pending Powell’s keywords: What to expect

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Markets on the rise, pending Powell's keywords: What to expect

Markets up this Monday -Ibex 35, CAC 40, DAX…- in an intense week again as far as macro data is concerned. Little by little we are approaching the key week of central banks, with the decisions of rates of the European Central Bank (16 March) and the US Federal Reserve (Fed), March 22.

As for the US agency, experts discount a 25 basis point increase. “We will also be watching how far the US central bank will raise its official interest rates, that is, what the terminal rate will be – now the market expects it to be in the range of between 5.25% and 5.50%, a hypothesis with which we quite agree, “they point out in Link Securities.

This week all eyes will be on the appearance of Jerome Powell, Fed Chairman, before the Senate Banking Committee (Tuesday) and before Congress (Wednesday).

“In principle, we do not expect Powell to deviate from this scenario when he speaks before both chambers, although we will have to be very attentive to what he says about the recent behavior of inflation and how he expects this variable to behave in the future. It will also be relevant to know, once again, his opinion on the state of the US labor market, which is much more stressed than was foreseeable at this point after the sharp increases in official rates, since a tense labor market has important inflationary connotations, “they highlight in Link Securities.

“We expect you to maintain your discourse on the need for additional rate hikes to control inflation and the need for these increases to remain data-dependent,” they reiterate for their part in Renta 4 (BME:RTA4).

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