World Week Ahead: Yellen testimony awaited
World Week Ahead: Yellen testimony awaited
By Margreet Dietz
Feb. 23 (BusinessDesk) - US Federal
Reserve chair Janet Yellen takes centre stage this week with
her semi-annual testimony to US lawmakers, as investors seek
to narrow further the window when the world’s most
important central bank will start to lift interest
rates.
Yellen’s comments on monetary policy and the
state of the US economy follow the release of January’s
policymaker meeting minutes which showed that the majority
of the Fed’s open market committee’s members are in no
rush to increase rates. She is set to testify on February 24
and again the next day.
Still most investors continue
to position for higher US rates at some point this
year.
“They want to tighten if they can,” Eric
Stein, a money manager at Eaton Vance in Boston who oversees
US$13 billion, told Bloomberg. “If everything stays the
same, I think they can tighten. They want to get off
zero.”
Traders see a 53 percent chance the Fed will
raise rates by September, versus 39 percent at the end of
last month, according to futures-trading data analysed by
Bloomberg.
Despite the approaching end of low rates,
which has helped fuel valuation gains, US stocks continue to
rally.
On Friday, the Dow Jones Industrial Average
rose 0.86 percent to close at a record 18,140.44, while the
Standard & Poor’s 500 Index increased 0.61 percent to end
at a record close of 2,110.3. The Nasdaq Composite Index
advanced 0.63 percent to 4,955.97.
For the week, the
Dow added 0.7 percent, the S&P 500 gained 0.6 percent and
the Nasdaq rose 1.3 percent.
"The market has done
quite well," Frank Cappelleri, technical market analyst and
trader at Instinet in New York, told Reuters. “Do we push
higher at this point, or do we need some of the extended
areas pull back to a greater degree?"
Macy's, Home
Depot, Target, Lowe's Companies and Gap are among the
companies set to report results in the days ahead as the
earnings season starts to fade.
But investors will
have lots to mull as it’s a big week in terms of economic
data.
Fresh clues on the US housing market will come
with reports on existing home sales today, S&P Case-Shiller
home price index on Tuesday, new home sales on Wednesday,
the FHFA house price index on Thursday, and the pending home
sales index on Friday.
Other data will arrive in the
form of the Chicago Fed national activity index, preliminary
PMI services, and Dallas Fed manufacturing survey, due
today; consumer confidence, and the Richmond Fed
manufacturing index, due Tuesday; the consumer price index,
durable goods orders, and weekly jobless claims, due
Thursday; and GDP, Chicago PMI, and consumer sentiment on
Friday.
On Friday, New York Fed President William
Dudley, Cleveland Fed President Loretta Mester, Fed Vice
Chair Stanley Fischer, European Central Bank Vice President
Vitor Constancio and Bank of Japan Deputy Governor Hiroshi
Nakaso are all scheduled to speak at a monetary policy
forum, in New York.
In Europe last week, the Stoxx 600
Index added 1.4 percent, lifting its gains to 12 percent for
2015. The DAX set an intraday high on Friday and set a fresh
closing high too. There’s a good chance European shares
will open higher after Greece and its EU partners agreed on
a four-month extension to the current financing
arrangement.
Monday’s advance though could be
checked because Greece’s fate is far from
certain.
“While Greece secured some ability to
rewrite the terms of its current program, the sense is that
the combination of pressure on its banking sector and on
state cash flows has forced the bulk of concessions to come
from their side,” Malcolm Barr, economist at JPMorgan
Chase, said in a client note, according to Bloomberg.
“This may place some degree of strain within Syriza
itself.”
A final resolution remains elusive and
whether Greece will remain in the euro zone is to be
determined.
(BusinessDesk)