This week is expected to be significant for the markets as the Federal Reserve, the Bank of England, and the Bank of Japan prepare to hold policy meetings. Additionally, the U.S. jobs report on Friday and more earnings results from major tech companies will be in the spotlight. Here’s a look at what’s happening in the markets next week:
1. Federal Reserve Decision and Non-Farm Payrolls:
With markets currently pricing in an 88% chance of a rate cut in September amid signs of slowing inflation and rising unemployment, the monetary policy statement to be issued by Federal Reserve Chairman Jerome Powell this week will be in the spotlight.
The Federal Reserve’s statement on Wednesday will put the closely watched non-farm payrolls report, scheduled for release on Friday, under increased scrutiny as investors try to gauge whether the recent signs of a slowdown in the labor market persisted in July.
Economists expect the U.S. economy to have added 177,000 jobs in July, down from 206,000 jobs in the previous month. The unemployment rate, which has risen slightly in each of the past three months, is expected to remain steady at 4.1%.
2. Bank of England Meeting:
The Bank of England meets on Thursday with investors divided over whether policymakers will make their first rate cut since 2020.
The level of uncertainty is higher than usual in the run-up to the meeting, as senior central bank officials have not spoken publicly for more than two months due to rules ahead of the general election in Britain on July 4th.
Investors are left puzzled about whether the recent inflation in service prices, which came in higher than expected, is sufficient to prevent the Bank of England from cutting interest rates from their 16-year high of 5.25%.
3. Bank of Japan Decision:
The Bank of Japan concludes its latest monetary policy meeting on Wednesday, with increasing speculation about the possibility of a rate hike after prominent politicians, including the Prime Minister, hinted at the need to normalize policy in the near term.
