With eyes on the Fed: breather in the markets awaiting key data

Waiting for key data from the Fed

US markets will be closed for the Presidents Day holidaygiving non-US assets some breathing space after last week’s relentless pressure.

The world stock index MSCI was up 0.2%, boosted by a modest start to the day in Europe, where the STOXX 600 It was up 0.2%, skirting the one-week lows on Friday.

The skyrocketing rise in stock and bond prices in the first six weeks of the year has come to a screeching halt, following a barrage of US data that suggested the world’s biggest economy is holding up much better than expected, meaning rates will have to keep going up and will take much longer to go down.

“Historically, equities rarely bottom out before the Fed has gone ahead with the cuts, and we’ve never seen a bottom before the Fed has even stopped raising,” said JPMorgan’s Mislav Matejka.

S&P 500 and Nasdaq futures were down 0.1%. The S&P hit its lowest level in two weeks on Friday.

Wednesday’s release of the Fed minutes may provide more insight into policymakers’ deliberations, but could have less impact than usual because the meeting came on the back of excellent January payroll and retail sales reports.

Besides, The Fed’s preferred inflation measure will be revealed on Friday, the underlying personal consumption expenditure (PCE) index. It is expected to have risen 0.4% in January, its biggest gain in five months, while the annual pace is expected to have slowed to 4.3%.

The futures of brent oil, which plunged nearly 4% last week, was up 1% at about $83.75 a barrel, while copper rose 0.5% to $9,033 a tonne. Both are highly sensitive to the health of the Chinese economy, which is still resuming more normal activity after three years of COVID lockdowns.

By Amanda Cooper, Reuters Agency