Investing.com – Global financial markets will focus on this week’s U.S. consumer price data, which should give clearer signs on the pace of inflation and fresh hints on the frequency of Federal Reserve rate hikes through the end of the year.
In addition to the CPI data, market players will also pay close attention to comments from a few Fed speakers this week for additional insight into the outlook for monetary policy.
Investors will have their eyes on the bond market after Treasury yields leaped to their highest levels in years after a batch of upbeat economic data bolstered the case for the Fed to raise rates in December and beyond.
The coming week also marks the start of the third-quarter earnings season on Wall Street, with major U.S. banks JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all reporting Friday.
U.S. stock markets are open for trade on Monday, but bond markets are closed in observance of Columbus Day.
Elsewhere, market participants will also be looking ahead to monthly trade figures out of China to see if the recent trade dispute with the U.S. had any impact on exports and imports in September.
Meantime, in Europe, market players will look ahead to the latest reading on British growth data for further indications on the continued effect that the Brexit decision is having on the economy.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. U.S. Inflation Data
The Commerce Department will publish September inflation figures at 8:30AM ET Thursday, which should lend further support to the notion that inflation has returned to the Fed’s target.
Excluding the cost of food and fuel, core inflation is projected to climb 2.3% on a year-over-year basis.
Besides the inflation data, this week’s rather light economic calendar also features reports on producer prices on Wednesday and a preliminary reading of the University of Michigan’s consumer sentiment gauge on Friday.
2. Fed Speakers
A number of Fed speeches will get market attention in the week ahead, as traders watch for further clues on interest rates.
Topping the agenda will be remarks from New York Federal Reserve President John Williams, who will be speaking about monetary policy at the Central Banking Forum, co-hosted by Bank Indonesia and the Federal Reserve Bank of New York, in Bali.
Speeches from Atlanta Fed boss Raphael Bostic, Chicago Fed President Charles Evans and Fed Governor Randal Quarles will also be in focus.
The Fed raised interest rates late last month, its third rate hike this year, and is expected to follow that up with another increase before the end of December, taking the benchmark fed funds rate to 2.25-2.50%.
3. U.S. Q3 Earnings Season Kicks Off
Banking giant JP Morgan will kick off the earnings season with its third-quarter report on Friday. The company will post its quarterly numbers before the market open with the consensus calling for earnings of $2.27 per share. The company earned $1.76 during the same period last year and shares are up 7% year to date.
— Jesse Cohen (@Bob_Loblaw420) October 7, 2018
Q3 earnings are expected to see growth of 19.2% over the year, according to FactSet, while revenues are set to rise 7.3%, with oil prices providing a boost to the energy sector and U.S. tax cuts helping to improve performance for the S&P 500 as a whole.
4. China Trade Figures
China is to release September trade figures on Friday morning.
The report is expected to show that the country’s trade surplus narrowed to $21.0 billion last month from $27.9 billion.
Exports are forecast to have climbed 9.1% from a year earlier, slower than August’s 9.8% increase, while imports are expected to rise 15.0%.
Recent data has started to show that the world’s second largest economy may be losing steam, raising concerns about the potential fallout from a full-blown U.S.-China trade war.
The U.S. has slapped tariffs on more than half of over $500 billion in Chinese imports, for which China has retaliated.
Plans for new trade talks collapsed recently and both sides appear to be digging in for a long fight.
5. UK GDP
The UK Office for National Statistics will publish economic growth figures for August at 0830GMT (4:30AM ET) on Wednesday.
The data is forecast to show the pace of expansion slowed to 0.1% from July’s 0.3% amid uncertainty over Brexit.
Britain is due to leave the European Union in March next year and divorce talks are expected to step up again ahead of an EU leaders’ summit on Oct. 18.
Prime Minister Theresa May has so far shown little sign of shifting away from her plans to keep close ties with the EU, amid criticism at home and in Brussels.
But the EU’s Brexit negotiators see a divorce deal with Britain as “very close”, diplomatic sources said, a signal that a compromise might be in the making on the most contentious issue of the future Irish border.
Most economists do not expect the Bank of England to raise rates again until after Britain has left the EU.