Daily Agenda: The Week Ahead, March 21 – 26, 2016
U.K., India and Japan report macro data points; China investment bank CITIC Securities reports results.
After the dovish tone in the Federal Reserve’s March 16 announcement sent risk assets higher worldwide, the week ended on an up note for many investors — particularly those who had wagered on a rebound by emerging markets benchmarks after commodity prices stabilized in recent months. Investors in emerging markets might get caution signals in the coming week, however, as political instability in Brazil threatens to undermine the nation’s credit ratings further. Trade data for India and financial results from China’s leading investment bank will help provide further insight into the health of the BRIC economies.
Monday, March 21: Richmond Federal Reserve President Jeffrey Lacker, the Federal Open Market Committee’s strongest hawk, will be speaking on a panel with Banque de France governor François Villeroy de Galhau, as part of a conference held at the Banque de France hosted by Philadelphia–based think tank Global Interdependence Center. With the trend in Europe toward negative base interest rates and the FOMC announcing that it is keeping its own ultradovish policy in tact, there will likely be much fodder for heated discussion.
Tuesday, March 22: The U.K. National Statistics Office releases February consumer and producer price index measures. The Bank of England kept base interest rates at a historic low 0.5 percent in its policy announcement on March 17, with an accompanying statement that underscored the potential risks tied to a U.K. referendum on European Union membership. While the prospect of a vote in favor of Brexit has left policymakers at the Bank of England uneasy, one factor that the committee indicated is not among their concerns is inflation. Although the bank’s leadership does expect resilient domestic demand to drive prices higher before year end, they anticipate that increase to remain well below the 2 percent target.
Wednesday, March 23: Visitors to India would do well to wear clothing that washes easily on Wednesday. The Holi festival of Spring gets underway with a playful splash of color with bright powders flung by children and adults alike. With the entire population of urban centers and small towns alike in on the fun, anyone in a public place is fair game for revelers to decorate, even police and other officials. As a celebration of spring and rebirth, the Holi holiday merriments are inspired by Hindu deity Krishna’s penchant for good-natured pranks during his youth. The holiday will provide a welcome break for investors in a week that includes the release of fourth-quarter 2015 trade data on Monday and foreign-currency reserve figures on Friday.
Thursday, March 24: CITIC Securities, subsidiary of Chinese investment bank CITIC Group, releases fourth-quarter 2015 financial results. In early February, Chinese state media reported that the CITIC Securities executives detained during the sell-off in equity markets last year had been released without charges filed.
Friday, March 25: Japanese Ministry of Finance data on monthly foreign debt purchases is expected to show that international demand for Japanese Government Bonds has continued through early March. Yields on Japanese Government Bonds sank to all-time lows last week after the Bank of Japan left the door open for further action, should negative deposit rates and easing fail to reverse deflationary pressures. The yield on the benchmark ten-year bond contracted to –0.135 percent in trading on March 18 as demand at home and abroad for long-dated JGBs were exacerbated by heavy buying by the Bank of Japan’s easing facility.
Saturday, March 26: Opening weekend for Batman V Superman: Dawn of Justice will be a key test for Warner Brothers and DC Entertainment. The production houses have committed to two League of Justice films scheduled for release in 2017 and 2019, respectively, featuring BVS director Zack Snyder as well as stars Ben Affleck and Henry Cavill reprising their roles as the caped crusader and man of steel.