Fedspeak: Powell in Sweden for symposium on central bank independence
Things are getting edgy as traders try to gauge how the Federal Reserve is thinking heading into 2023. Chairman Jay Powell will attend an international symposium on central bank independence on Tuesday. of Sweden’s Riksbank in Stockholm. While the event, which begins at 9 a.m. ET, may not include any updates on the state of US monetary policy, markets will still be hanging on his every word.
Snapshot: Powell’s speech follows a solid jobs report for the US economy. Wage growth is rising, but cooling enough to dampen inflationary pressures, while employers are still hiring – at a pace of 223,000 in December – but slowing from last year’s unsustainable numbers. Unemployment was also at 3.5%, the lowest level in decades.
Many hope the data shows a soft landing is still possible, especially when other economic numbers are factored in. The consumer price index is released on Thursday and is expected to show the sixth consecutive month of falling inflation (at a rate of 6.5%). According to CME’s FedWatch tool, traders are now pricing in a 77.2% chance that the FOMC will raise its key rate by only 25 bps in late January, continuing to slow the pace of hikes.
Sight: Earnings season also kicks off this week, with results and guidance helping to paint the picture of the US economy. A special thank you to everyone who participated Wall Street Breakfasts “Survey Monday.” The opinion poll was split fairly evenly among the nearly 500 participants, with 56% believing S&P 500 companies will report their first losing quarter since 2020, compared to 44% expecting Q4 to still see some earnings growth.