© Reuters
| By Noreen Burke, Investing.com |
Investors will continue to monitor plans to raise the U.S. debt ceiling this week, while speeches by Federal Reserve policymakers will be closely analyzed for insights into the future path of interest rates. Stock markets are likely to continue the negative sentiment, while macro data from the Eurozone, U.K. and China will offer insights into the global economic outlook.
| Fed senior speeches and macro data
As investors fear that the Fed’s aggressive interest rate hikes could push the US economy into recession, they will be watching closely the speeches of several top central bankers in the coming days.
The Fed’s vice chairman for supervisory affairs is scheduled to testify before Congress about the latest pressures in the banking sector and the central bank’s response. On Friday, former Fed Chairman Ben Bernanke will participate in a panel on monetary policy in Washington.
Other senior Fed officials scheduled to appear during the week include New York Fed President John, Cleveland Fed President Loretta, Minneapolis Fed President Neal and Governors Philip and Michelle.
Bowman said on Friday that the Fed would likely have to raise interest rates again if inflation remained high.
In the US, the data for the month of April and the data for the month of April will be published on Tuesday, when retail sales are expected to recover.
The weekly report on the number should be published on Thursday.
| The debt ceiling is worrying
Concerns about a potential default in the US as early as June 1 weigh on investors, amid a stalemate in Congress regarding raising the debt ceiling limit.
The Congressional Budget Office warned on Friday that the US faces a “significant risk” of default in the first two weeks of June if lawmakers fail to increase the amount of debt the country can legally take on.
Talks between US President Joe Biden and senior lawmakers on raising the $31.4 trillion debt ceiling are set to resume early this week, after a meeting scheduled for Friday was postponed to allow teams involved in the issue to continue negotiations.
Republicans insist on making the debt ceiling increase conditional on drastic cuts in government spending, while Democrats insist that the debate on the debt ceiling should be done without preconditions.
The International Monetary Fund warned that a US default would have “very serious consequences” for the US economy as well as the global economy, including higher interest rates.
| US stock markets
The stock markets in the US concluded last week with declines when the index fell by 1.1%, the – fell by 0.3% and rose by 0.4% as a result of a combination of concerns about the impasse of the debt ceiling and monetary policy.
Data from Friday showing a steeper-than-expected decline in American consumer sentiment added to concerns that political bargaining over raising the debt ceiling could trigger a recession.
Meanwhile, speeches by senior Fed officials on Friday added to the uncertainty of whether the central bank will hold off on raising interest rates next month as many in the market expected.
Earlier this month, the Fed indicated that it may hold off on further interest rate hikes while it tries to assess the impact of the tightening so far, as well as the impact of recent stress in the banking sector on lending and credit to the American public.
Report season continues next week. Among the important reporting companies – Walmart (NYSE:), Home Depot (NYSE:) and Cisco Systems (NASDAQ:).
| Macro data in the Eurozone and the UK
The Eurozone will publish revised data on Tuesday, with economists expecting the bloc’s economy to see an expansion of just 0.1% in the first three months of the year.
Some economists believe that the continued stagnation in the growth of the Eurozone could cause a recession later this year.
On the same day, an institute survey predicting business conditions and sentiment in the largest economy in the Eurozone, Germany, will also be published.
Back in the UK, Tuesday’s jobs and wages data will be of interest, with UK inflation still in double digits. The Bank of England indicated that the decision whether to raise interest rates again at its meeting in June will depend on the wage and inflation data released before then.
| Economic data in China
China will release a slew of economic data on Tuesday, including reports on , and fixed asset investment. Economists expect retail sales and industrial production to accelerate at a rapid annual rate, while investment in fixed assets is also expected to rise significantly.
But the monthly growth figures will give a more accurate picture, as China’s economy was still under strict corona lockdowns in the same period last year.
Economic data from China released last week suggested the world’s second-largest economy was struggling to gain momentum amid an uneven recovery after restrictions were lifted, adding to doubts about how much it could contribute to global economic growth this year.
- – Reuters contributed content to this article
