By Noreen Burke
Investing.com -- The Federal Reserve’s latest meeting minutes will be in the spotlight amid renewed uncertainty over how high interest rates may ultimately rise in the central bank’s battle against inflation. Personal income and spending data on Friday will give more insight into price pressures, while earnings from major retailers will shed some light on how consumers are faring amid soaring prices. The Eurozone is to release flash PMI data and testimony from the incoming Bank of Japan governor may give more insight into his monetary policy stance. Here’s what you need to know to start your week.
1. Fed minutes
On Wednesday the Fed is to publish the minutes of its January meeting, when it scaled back the pace of interest rate hikes to 25 basis points after a year of outsize increases.
Since then, data has shown the decline in the annual rate of inflation has stalled while producer prices rose by the most in seven months in January.
Together with a strong U.S. jobs report for January, the data has prompted investors to reevaluate expectations for how high the Fed will ultimately raise rates. They now see the federal funds rate peaking above 5.2% in July, according to interest-rate futures.
The minutes may give investors some insight into the appetite for a larger hike at the Fed’s upcoming March meeting after recent comments from some policymakers indicated support for such a move.
- U.S. data
The U.S. is to release what will be closely watched personal income and spending data on Friday, which contains the Fed’s favored inflation gauge - the core personal consumption expenditures price index.
The economic calendar also includes updates on both new and existing home sales for January, along with revised data on fourth quarter gross domestic product and the weekly report on initial jobless claims.
Meanwhile, New York Fed president John Williams is to speak about inflation at an event on Wednesday.
3. Retail earnings
As an underwhelming fourth-quarter earnings season comes to an end, results from major retailers will give an insight into the strength of consumer spending amid soaring prices - a critical topic for investors.
Walmart (NYSE:WMT), the world's largest retailer by sales along with home improvement giant Home Depot (NYSE:HD) are set to report on Tuesday and will "set the stage for everyone else," according to JPMorgan retail analysts.
"We expect HD and WMT’s tone on guidance and the consumer to be cautious at best," the JPMorgan analysts wrote in an earnings preview note last week. They rate Walmart shares "neutral" and Home Depot as "overweight."
Discount retailer TJX Companies (NYSE:TJX) reports Wednesday and beyond the retail sector chip company Nvidia (NASDAQ:NVDA), COVID-19 vaccine maker Moderna (NASDAQ:MRNA) and e-commerce firm eBay (NASDAQ:EBAY), will also report in the coming week.
4. Eurozone PMIs
The highlight of the week in the Eurozone economic calendar will be Tuesday’s flash PMI data for February, which will show how well the economy is performing after unexpectedly growing in the final quarter of 2022.
If improving business conditions are contributing to rising price pressures, this could bolster expectations for the European Central Bank to keep raising interest rates given persistently high inflation.
Germany’s Ifo Business Climate Index on Wednesday will show how the region’s largest economy is weathering the energy crisis, with economists expecting signs of recovery to continue at low levels.
The bloc is also to release final inflation figures for January on Thursday, which will be in focus after delayed German data was omitted from the first estimate.
5. BOJ testimony
Leadership of the BOJ is in transition to academic Kazuo Ueda, who is expected to succeed current Governor Haruhiko Kuroda, when his second five-year term ends in April.
The incoming BOJ governor is to testify, along with his two would-be deputies, to the lower house of parliament on Friday.
While Ueda is a dove, investors expect his tenure to end yield curve controls. The $8-trillion question for the Japanese bond market, though, is when?
His testimony should offer some clues and will be closely watched. His upper house testimony will be on the following Monday.
--Reuters contributed to this report