Top 5 Things to Watch in the Markets in the Next Week By

© Reuters

Written by Noreen Burke – Investors will closely monitor Friday’s US jobs report to assess the impact of the Federal Reserve’s interest rate hike on the economy. Several Fed officials are also scheduled to speak during the week, as markets try to gauge their appetite for another 75 basis point rate hike at the bank’s November meeting. US stock markets appear poised to remain volatile after closing the books for the third consecutive quarterly decline on Friday. In the UK, investors at the annual Conservative Party conference will be looking for any indications of a shift in the government’s budget to cut taxes which has led to a weaker pound and higher government borrowing costs. Meanwhile, it was reported that OPEC is considering a significant production cut at its next meeting on Wednesday. Here’s what you need to know to start your week.

  1. September employment report

Friday’s September jobs report will show whether a string of aggressive rate hikes by the Federal Reserve is having an impact on the labor market.

Economists expect the US economy to have created jobs last month, with the unemployment rate remaining steady on the rise.

Recent jobs data indicated that the labor market remains strong despite a series of massive price increases.

Another strong jobs report could underscore further tightening from the Fed, and already turbulent markets are likely to be hit hard by concerns about how interest rates will rise as the central bank battles the worst inflation in forty years.

On the other hand, indications of a slowing labor market may add to fears that aggressive Fed tightening risks pushing the economy into a tailspin. Recession.

  1. Fedspeak

Several Fed policymakers are scheduled to appear during the week, including New York Fed President John, Atlanta Fed President Rafael Bostic, Chicago Fed President Charles Evans, and San Francisco Fed President Mary Daly, and Cleveland Federal Reserve Chairman Loretta.

Investors are assessing the possibility of another 75 basis points at the Federal Reserve’s November meeting. Recent comments by Federal Reserve officials have indicated that they want to see clear evidence of slowing inflation before they abandon policy tightening.

The Fed’s policy rate is now in the 3.00%-3.25% range, a full 3 percentage points higher than it was at the beginning of 2022, and officials have begun to ramp up rate hikes later this year and into 2023.

The economic docket also includes August data along with surveys and sectoral activity from the Institute for Supply Management, which are expected to remain strong.

  1. stock market volatility

Markets are entering the final phase of 2022 after closing the turbulent third quarter on Friday, amid rising inflation, high interest rates and recession fears.

Wall Street posted three consecutive quarterly declines, the longest losing streak since 2008 and the longest quarterly decline in seven years.

As the Federal Reserve ramped up its monetary tightening to tame the worst inflation in decades, US Treasury yields jumped to their highest levels in more than a decade, drawing criticism for stock valuations.

Many investors believe the wild moves will continue until there is evidence that the Federal Reserve is winning its fight against inflation, eventually allowing policy makers to end monetary tightening.

  1. UK market turmoil

The annual Conservative Party conference begins on Sunday and market participants will closely watch the speeches of the party leaders after the new government caused the market to crash with its “mini-budget” on Sept 23 that included plans to cut taxes and pay with borrowing. .

Within days it reached record lows, and high government borrowing costs forced the Bank of England to intervene to halt the market crash.

The Bank of England’s pledge to buy $69 billion (£65 billion) in long-term bonds has calmed markets for now, but it’s too early to say the defeat is over. The Bank of England is now in a position to postpone its plan to sell bonds, resulting in monetary easing, while at the same time tightening as interest rates rise.

It is expected to raise interest rates further in November and has said it will stick to the plan to sell its bonds.

Investors say the government will have to work hard to restore confidence.

  1. OPEC meeting

The Organization of the Petroleum Exporting Countries and its allies, including Russia, are due to meet on Wednesday at OPEC’s headquarters in Vienna to finalize production quotas in November.

Earlier on Sunday, Bloomberg reported that the group would consider, against the backdrop of low oil prices and extreme market volatility.

It rose after the Russian invasion of Ukraine in February but has since fallen back amid concerns about the impact of strong monetary tightening on the global growth outlook. The strength of the US dollar also affected prices.

-Reuters contributed to this report

Leave a Comment