Week Ahead Central bank minutes to guide interest rate expectations

The past week in the markets has been dominated by dramatic, and often incongruent, moves that have been marked by still-buoyant volatility in the aftermath of the preceding week’s wild market swings. Through the course of the past week, equity markets rebounded sharply, paring much of the losses that were suffered when stock indexes briefly entered into correction territory during the first full week of February.

This sharp equity rebound has occurred despite increasing fears of rising inflation and interest rates that were recently put on full display as US Treasury yields hit new multi-year highs and US inflation indicators came in significantly higher than expected. Also defying expectations was the US dollar, which continued to fall through much of the past week, establishing yet a new three-year low on Friday (before bouncing), despite growing anticipation of higher US interest rates and a potentially more hawkish Federal Reserve.

In the week ahead, markets should continue to be preoccupied with the specters of rising inflation and interest rates as reflected in government bond yields. Of more immediate concern, however, will be the release of minutes from three major central banks detailing their most recent monetary policy meetings. These reports will provide important clues as to the central banks’ monetary policy stances, potential interest rate trajectories, and outlooks on inflation and economic growth.

The Reserve Bank of Australia is up first on Tuesday in Sydney with its release of meeting minutes. In early February, the RBA left interest rates unchanged as widely expected, marking a full year-and-a-half without any rate changes. The central bank is not expected to raise interest rates until either late this year at the earliest, or possibly next year, as its recurring concerns about a strong Australian dollar is one of the factors precluding a more immediate rate hike.

Next up is Wednesday’s Federal Reserve release of minutes from its FOMC meeting at the end of January, in which the central bank kept rates steady. Though new inflation data has emerged since then, any substantive discussion of inflation during that meeting will provide some indications as to the Fed’s potential policy trajectory.

Finally, the European Central Bank releases its own monetary policy meeting accounts on Thursday. The euro has remained exceptionally buoyant, especially against a heavily weakened US dollar, on a rising eurozone economy and keen anticipation of monetary policy tightening by the ECB. Recently, the central bank hinted that the era of extraordinarily loose monetary policy is essentially over, which lends further support for potentially more hawkishness from policymakers on a global scale.

Along with the release of minutes from these three major central banks, some other important events and releases are as follows:

Tuesday, February 20th:
- Reserve Bank of Australia Monetary Policy Meeting Minutes
- Canadian Wholesale Sales (M/M)
Wednesday, February 21st:
- Australian Wage Price Index (Q/Q)
- French Flash Services PMI
- French Flash Manufacturing PMI
- German Flash Services PMI
- German Flash Manufacturing PMI
- Eurozone Flash Services PMI
- Eurozone Flash Manufacturing PMI
- UK Average Earnings Index (3M/Y), Claimant Count Change, and Unemployment Rate
- UK Inflation Report Hearings
- US FOMC Meeting Minutes
Thursday, February 22nd:
- UK GDP (Q/Q)
- European Central Bank Monetary Policy Meeting Accounts
- Canadian Retail Sales and Core Retail Sales (M/M)
Friday, February 23rd:
- New Zealand Retail Sales and Core Retail Sales (Q/Q)
- Eurozone Final Consumer Price Index (Y/Y)
- Canadian Consumer Price Index (M/M)

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.