The Week Ahead from abrdn’s Thomas Watts

by | Mar 6, 2023

Thomas Watts, Investment Analyst, abrdn, comments on the economic data releases this week;

“Although Spring may be just around the corner, the Met Office has also confirmed a major SSW (a sudden stratospheric warming event for those not in the meteorological know) may be paying Britain a visit during the coming week. Similar to the event that caused the “Beast from the East” back in 2018, we should expect bitingly cold fronts and heavy snowfall as a movement in the Jet stream blocks high pressure coming in from Europe.

“There will be no cooling off period for economists however, who will be examining the British Retail Consortium’s retail sales numbers. Measuring the change in the value of same store sales on a yearly basis, the numbers should prove to be invaluable when assessing the strength of the High Street. With inflation showing little sign of abating in the near term, the numbers should make for interesting reading to gauge just how this is affecting consumer spending.

“Whilst temperatures plunge, it would seem that inflation remains stubbornly hot across the western world. Higher than expected US jobs data and Consumer price index (CPI) numbers have now left global markets a little warm under the collar, with hopes of a slowing in rate policy rapidly evaporating. Jay Powell, the US Federal Reserve Chair, will give his views on the situation, testifying at a semi-annual monetary policy report before the Senate Banking Committee, in Washington DC on Tuesday evening.

“Come rain or shine, Friday brings with it US Non-Farm Payroll data. A key piece of information when determining the US central bank’s next rate move, it provides plenty for economists to get their teeth stuck into. Acting as a key metric for the US labour market, the data will be accompanied by Average Hourly Earnings, allowing us to gauge future inflation expectations as the more consumers earn, the more they tend to spend. This is a phenomenon that will be watched very closely by the US Federal Reserve, especially after last month’s bumper report, showing four times more Americans entered the labour market than anticipated.”

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