Investing.com – After disappointment over the latest series of economic reports, the final reading of growth in the fourth quarter of the US will be the main event in financial markets this week as investors are waiting for more track on the state of the economy.
In addition to the GDP report this week, it also includes data on personal consumption inflation (PCE), which is the Fed's favorite inflation rate.
Market players will also be very aware of the statements made by many Fed officials this week to get to know their monetary policy forecasts for the coming months. The Fed has already announced that this year will not continue to raise interest rates, which could lead to the end of the three-year cycle of monetary policy adjustments.
Investors will also focus their attention on the US bond market, where the difference between the yield of three-month and 10-year bonds fell for the first time since 2007. one of the main indicators of recession.
In the meantime, trade talks between the United States and China will also be delayed by investors this week, while Finance Minister Steven Mnuchin and other members of the management board of Trumpe, Beijing.
The focus will also be on Brexit.
Next week, Investing.com prepared a list of events that could influence the course of the markets.
1. United States GDP 4T – final reading
United States economic reports will be at the center of all eyes, especially after disappointment over the latest data that shows consumers and businesses are down.
The US Department of Commerce will release final data on economic growth for the fourth quarter at 13:30 (CET) on Thursday.
It seems that these figures will show that the economy in the last three months of 2018 annually increased by 2.4%, which was corrected according to the previous estimate, representing 2.6%. In the third quarter of last year, the economy grew by 3.4%.
The economy is losing steam, as the impetus of the package of tax cuts of 1.5 trillion and an increase in public spending is being deflated. The trade war between the United States and China, the slowdown in world growth and the uncertainty about the departure of the United Kingdom from the European Union are promising.
2. Data on PCE inflation in the US
The Ministry of Commerce will publish data on personal incomes and expenditures for January, which include data on personal consumption inflation (PCE) at 13:30 (CET) on Friday.
It all points to a report that said the PCE price index in the core increased by 0.2% after having increased similarly last month. At the annual level, the basic PCE prices are expected to increase by 1.9%.
The Fed uses the basic PCE to determine whether it should raise or lower interest rates in order to keep inflation at 2% or lower.
Other important economic data published this week include the latest consumer confidence report, as well as data on building permits and housing promotions.
3. Fed officials
The Fed's series of appearances this week will attract the attention of the market, as retailers expect to learn more about monetary policy.
President of the American Federation, Charles Evans, Philadelphia Philadelphia chairman Patrick Harker and Boston president Eric Rosengren will appear on Monday.
Evans and Harker will again make statements Tuesday, as well as the chairman of the San Francisco Bank of the Federal Reserve Mary Daly.
On Wednesday, the president of the Kansas City Federal Reserve, Esther George, appeared at an event organized by Marketeers of Money at the University of New York.
Fed Vice President Richard Clarid, FED Governor Randal Quarles, FED Governor Michelle Bowman and the President of the Federal Government of St Louis James Bullard will present themselves on Thursday.
Quarles will offer his statements on Friday.
Fed officials suggested last week that there will be no rise in interest rates this year after they announced in December that they could reach two. The United States central bank also said it intends to end the reduction of its huge balance of 4.2 billion in September.
4. Negotiations between the United States and China
High officials of the United States and China will continue the negotiations this week, but it is not clear whether they can reduce their differences and end the trade war between the two largest economies in the world.
Trade Representative Robert Lighthizer and Finance Minister Steven Mnuchin will leave for Beijing in the final round of high-level talks that will begin on Thursday.
On Friday, US President Donald Trump said that negotiations to resolve the eight-month trade dispute between the two largest economies in the world are progressing and that final agreement is likely.
However, US officials overlook the possible sudden discontinuation of negotiations, as China does not seem to support US demands to limit restrictions on technology companies, the Financial Times reported this Sunday. to three sources that are close to these discussions.
The Financial Times reports that Beijing has not yet offered "substantial concessions" to the US demands that China stop discrimination against foreign providers of cloud computing services in order to reduce data transfer restrictions in the country. and mitigate the requirement for local storage of company information.
5. Uncertainty surrounding the Brexit
The threat of such harmful departure from the United Kingdom of the European Union without an agreement on 29 March arose due to the delay given to Prime Minister Theresi May, the other EU leaders last week.
But that risk could have returned back to April. Or, the delay could be extended until May or later, depending on whether the Prime Minister can remove Brexit from the state of stagnation in which he is in Parliament.
After three years of wrong discussion, it remains uncertain, how and when Brexit will take place.
Maj on Friday warned that this week may not be able to re-submit its EU exit agreement, which has already been rejected by Parliament twice, thus removing its Brexit strategy. The Times and Daily Telegraph reported increasing pressure to withdraw from May.