The Pace Of The Week Just Picks Up From Here

Today was supposed to ease us into a week with just too much big macro potentially market-moving news. So much for easing. Thanks, Facebook.

Weeks like this don’t come around often, thank goodness, but when they do, Whew!

Monday eases investors and traders in slowly. The government in Beijing picks a new governor for the People’s Bank of China. This past week the bank got authority to rewrite the rules for the financial sector in order to reduce speculation and control bank leverage. This appointment is important in the long term, but I doubt it will move markets this week.

Tuesday gets a bit more serious as finance ministers from the Group of 20 economies gather in Buenos Aires for their first meeting of 2018. The statement that the group will release on Tuesday will be eagerly scanned by traders and investors looking for clues on global economic growth, inflation fears, and, of course, the potential for the U.S. tariffs on steel and aluminum to set off a global trade war.

Wednesday’s meeting of the Federal Reserve’s interest-rate-setting Open Market Committee is almost anticlimactic. Everyone assumes that the U.S. central bank will raise interest rates. But do remember I said “almost.” With a rate increase pretty much priced in (and therefore a non-event for financial markets), attention will focus on the Fed’s post-meeting statement and the first post-meeting press conference by new Fed chair Jerome Powell. The live question is how many increases the Fed is contemplating for 2018. Anything that suggests less than 3 is more likely or that more than three is more likely has the potential to move bond prices and yields. The Banco Central do Brasil also meets today and is expected to cut its benchmark interest rate to a record low.

Thursday is almost a day off but the Bank of England is expected to continue to prepare the way for a May interest rate increase. Inflation in the United Kingdom is 1 percentage point above the bank’s target. The market is currently pricing in an 80% chance of an interest rate increase in May. (The day also brings Germany’s Ifo business sentiment index. Expectations are that the index will show a slip.)

Friday marks the effective date for the Trump Administration’s 25% tariff on imported steel and 10% tariff on imported aluminum. Which also means that by Friday markets will have a pretty good idea of which U.S. trading partners got exemptions from the tariffs. It’s not outside the realm of possibility that China and the European Union will announce concrete trade measures of their own on Friday, but it’s more likely that we’ll see those roll out next week.