Market Forecast 15.03.2017
After a slight disruption in a straight winning streak of the US stocks last week, the economic report and labor market are still promising and optimistic. Rates would be released this week, and here is a takedown of what would transpire this coming week.
The real deal would be whether the rate hike this coming March 15 would be able to sustain the expectations of investors and the concerned public. This is a scenario where the rate would be beneficial, yet at the same time disappointing due to its inherent risk. The economy as noted by Fed Chair Janet Yellen, is operating under speculation and speculation alone. It has not reached the boundary of objectives reasonable enough to conclude its effectiveness. The setback would be on the US dollar, as it would not gain enough if the Fed decided to increase its rate.
As for gold prices, the coming week might add a slight indicator of short-term confidence on the increase of its trading price. Oil inventories are seen to continue their record high number, which could counter the falling demand for gasoline, which resulted from its dismal closing price last week.
The inflation report would likely cause more increase in interest rates, as relayed by Yellen. On the report to be released Wednesday, consumer prices are predicted to increase by 0.2%, due to the increase in prices for automobiles, clothing, and energy. This increase in prices of commodity indicate a trigger point for inflation rate increase. Unemployment claims still continue to be below the 300K mark, which sustains a healthy labor market for the country.
The Bank of Japan would release its rate decision this coming Thursday. The bank’s governor Haruhiko Kuroda said that the inflation rate target of 2% might be taking quite a longer time to achieve. While the concern is looming over Donald Trump’s protectionist policy, Governor Kuroda said that the said policy would actually be able to boost economic growth around the world and in the US. How this would occur is still mere speculation and projections for export activities are looking good until the upcoming fiscal year.
The Bank of England would also release its rate decision on Thursday. The past report saw the benchmark rate for the bank being retained at 0.25% and the bank opting to retain its measures on its other monetary policy. The bank positively forecasted an improvement in the economy, which would result in a higher chance of a rate increase in comparison to not putting a cut on it. The economic growth prediction rate is set at 2%, together with a lower rate for unemployment. Brexit seems to keep the growth from halting, and the country’s policymakers could expect continuous growth for the coming months.
The country would release its GDP data this coming Wednesday with a forecasted a 0.7% growth rate for Q4 of 2016. The last third quarter saw an increase in construction and consumer spending activities. The resulting forecast was triggered by a rising number of tourists, boosting manufacturing for tourist export and retail. Note also that the service sector took an expansion of 1.1% for the quarter alone.
As always, stay diversified and study the balance of an investment portfolio. Market volatility is a surefire miss, if not considered carefully.