The CPI and PPI data released in the United States last week exceeded expectations, affecting both the US stock market and Bitcoin, and also delaying the timing of interest rate cuts. This week, the Federal Reserve will release the latest meeting minutes and several officials will make speeches, attracting investors’ attention.
The US Bureau of Labor Statistics released the January Consumer Price Index (CPI) on Tuesday (February 13th), showing a year-on-year increase of 3.1%, higher than the market’s expected 2.9%. This almost ruled out the possibility of a rate cut by the Federal Reserve in March, causing a drop in the US stock market and Bitcoin falling below $49,000.
However, the next day, Chicago Federal Reserve Bank President Austan Goolsbee came forward to reassure the market, stating that even if the future inflation rate exceeds expectations slightly in the coming months, the Federal Reserve will still be on track to reach its 2% inflation target. Goolsbee emphasized not to judge inflation trends based on data from a single month, as the Federal Reserve’s target is based on the Personal Consumption Expenditures Price Index (PCE) rather than the CPI, and these two indicators may have “some significant differences.”
Encouraged by this, Bitcoin and US stocks rallied again. Next, we will summarize the potential events this week that may bring volatility to the market.
The Federal Reserve will release the latest monetary policy meeting minutes (January 30-31) on Thursday (February 22) at 3 am Taipei time, becoming the focus of market attention. Due to the CPI and PPI data released last week exceeding expectations, reflecting persistent inflationary pressures in the United States, the market has become more pessimistic about the Federal Reserve’s expected interest rate hike in the first half of the year. The CME Fed Watch data shows that the market believes there is nearly a 90% chance that the Federal Reserve will pause rate hikes at the March meeting and a 65.3% chance of keeping rates unchanged at the May meeting.
On the other hand, several Fed officials will also make speeches this week, including Raphael Bostic, President of the Federal Reserve Bank of Atlanta, who has voting rights in the Federal Open Market Committee (FOMC) this year, and four directors. They will speak on Wednesday, Thursday, and Friday respectively.
NVIDIA, the astonishing chip giant, will also release its fourth-quarter financial report for 2023 (as of January 28, 2024) after the US stock market closes on Wednesday (February 21). Analysts predict that profits and revenues will increase significantly due to the development of artificial intelligence (AI) at Bloomberg. Data shows that NVIDIA’s stock price has risen by 47% since the beginning of this year and surged by 230% in the past year. Loop Capital analyst predicted last Friday that NVIDIA’s strong momentum is far from over, giving a “buy” rating and setting Wall Street’s highest target price of $1,200 per share.
As NVIDIA has a high impact on the weight of the US stock market’s S&P 500, if the released financial report does not meet market expectations, there may be a large-scale volatility. In addition, several US retail giants, including Home Depot and Walmart, will also release their latest financial reports this week. As consumer spending accounts for two-thirds of the US economy, their financial reports can provide a glimpse into the current financial situation of American households. Optimistic performance may help resist the risk of an economic recession.