 Welcome to the outlook for global markets for the week ahead going to start where we finished last week And this was the performance of the S&P 500 on Friday You can see pretty much green across the board and in fact all three of the major Averages in the US finished in positive territory a winning week overall the S&P 500 closed up around 1.9% And in fact on the week that means it's his first positive week that it's had in the last four And it's been chiefly driven by speculation that the Fed won't raise interest rates beyond peak levels already priced in However, as I'm going to discuss in the first portion of this quick briefing is four key things that we're going to be looking out for over the next coming trading days and Starting off with the first one is this. This is one of the biggest events of the week Jerome Powell the Fed share he is going to be delivering his two-day biannual Monetary policy testimony on Capitol Hill Now the first one will be a report to US Senate Banking Committee on Tuesday That's always the one that the market looks at the most and therefore has the most market moving potential Because generally then it gets reiterated basically repeated text to the House Financial Services Committee on the Wednesday And what we're looking for are any hints in regards to the economic outlook in the US Specifically around inflation wage pressures and employment So ultimately trying to get a sense check of how is the market priced and does he need to move the dial at all? Because it's probably going to be one of the last times He's going to be able to make public remarks before they're going to the blackout period the Fed meeting happening on March 21st 22nd so that's the kind of first thing to watch on the radar The next thing then this week is going to be non-farm payrolls That is coming out on Friday and you'll remember we had a barn storming figure last time out real surprise for the markets The actual median consensus this time round is it is expected to drop to 215,000 that's according to the median estimate on the street. This was after the 517,000 absolute knockout surprise that we had well and over and above the most bullish estimate on the street last time out Ultimately though the data does come down to wages and whether or not the Fed thinks that they're slowing fast enough In order to drive inflation lower is going to be quite key and in the typical Standard format we're going to get the ADP national employment number on Wednesday afternoon UK time So that's the second major thing of four to look out for looking a little bit further afield going to the following week This is March 14th US CPI Any signs of persistent inflation could push the Fed to raise rates higher than is currently priced and that would be very destabilizing as far as equities are concerned particularly exacerbated in growth related stocks and could likely then give support to the greenback way on major dollar-based pairs like euro cable and also See higher yields in the US start to be priced in So inflation still is very much critical the forecast at the moment for February CPI Which will get on March 14th is 6% and improved from January 6.4 percent i.e. He's coming down a little bit, but core CPI which obviously strips out some of those volatile components is you can see here has moderated far less or Moderated more so than the big drops that we've been more accustomed to in the prior months The important reading though, of course, is the one that the Fed watches the most which is their preferred Measure of inflation which is PCE price index and you can see that last figure that we had for the month of January actually went up and hence the reason why the Fed have been sounding quite hawkish more recently and Despite the more better week that we've had in US equities last week The reason for the downturn that we've had through the period of the month of February overall now One of the things that came out over the weekend was a comment from a Fed speaker or be a non-voting member Which is Mary daily. She is the San Francisco Fed president She had an audience on Saturday at Princeton University Where she said in order to put this episode of high inflation behind us further policy tightening Maintained for a longer time will likely be necessary. So very much sticking to the script She does Stand slightly more on the hawkish end of the spectrum in terms of the hawk does on the FOMC Taking a look then the final of the four things of course is ultimately then the decision-making which will happen in 16 days time So these four events are really quite critical over the next two weeks And that of course is going to be the March 22nd FOMC meeting Not only because we're going to get then the rate decision with the normal press statement We're also going to get the latest quarterly projections Of course, but we'll be looking out for the dot plot updates and power will also hold his regular press conference in terms of the markets Expectation for that at the time being this is what we're looking at So just shrink this down a little bit markets are currently priced in federal funds rate futures at a 72% probability for a height of 25 basis points. However, things are subject to change and here's a quick look at The forward implied volatility data. This was something that I saw city group analysts put out over the weekend Forward implied volatility is a measure of expected future volatility for a financial asset And this is based on prices of options with expiration dates further in the future So it gives us a bit of indicative taste of where markets already here today see potential future volatility in the future And as you can see labeled here are these key events the FOMC one being the highest of forward implied volatility at this point in time I would say the payrolls one's probably a little bit underpriced in that in that respect last time Out it was a real shocker and I would say then that kind of means that there's probably likely to be a greater variance of Expectation and a lack of real direction as how's the markets will position itself for that release So I'd expect that to tick up as we get closer to it So you can see everything is ratcheting up into the main event which will get on 22nd of March So definitely a few things to look out for but bringing things back to this week just to wrap things up from a news perspective China have come out. They've set a modest economic growth target around 5% for the year This comes as Premier Lee announced a goal for GDP in his final report to the Communist Party control Parliament Which kicked off its annual meeting today Sunday Economists had expected a more ambitious target of 5% following a rebounding consumer and business spending We've also seen that quite substantial u-turn on the zero tolerance COVID policy So the aggressive reopening some might have thought then they might be a little bit more ambitious here But I would say it's probably quite a calculated move from the Chinese government Cautious out that this year would likely then see them exceed that and they're looking to then restore some credibility Around this target they put out on an annual basis and it will give President Xi Jinping and his new economic officials more policy room To focus on some other key objectives as well. The other things over the weekend ECB's Christine Lagarde, she's been pretty vocal of late and again same thing talking about inflation She warned in Spanish press this weekend that underlying inflation pressures will remain sticky in the short term and signaled that further interest rate rises from the ECB are Very likely as the inflation is a monster that we need to knock on the head Those are the actual words that she used and as you can see here The blue line is Eurozone HICP But the red line is the key one and that is Eurozone core inflation Which you can see here shows no sign as yet of slowing down despite the pull-off that we've seen in the headline rate So for now the ECB needs to keep hiking and that's what Christine Lagarde telling us at this weekend. It's the same as what she told us Last week so nothing really too new there to put but to be aware of the other things happening This week are BOJ's meeting particularly Symbolic I guess because Corroda who you can see pictured here the governor. It's his last meeting and he could deliver a parting shot Whether or not that materializes yet to be seen the chief focus of course is on any adjustments to the BOJ's Yield curve control policy otherwise known as YCC the mechanism by which the central bank is attempted to fix the level of 10-year Japanese government bonds remember in December Very much the surprise of markets and out of keeping with his generally Resolute dovish stance that he tends to have Corroda tweaked the yield curve control to widen the scope for tenure rates to fluctuate around the targeted level The idea here is that in the end that your curve control probably ceased to exist under the new leadership Whether he'll want to rock the boat this time round. I'm not so sure the other thing then from a rate decision perspective We do have the Bank of Canada Analyst generally a little bit more confident that we're probably going to see an unchanged decision from them And that's because at the 25th of Jan POC policy meeting the governing council stated explicitly that they hold The policy rate at its current level while it assesses the impact of cumulative interest rate increases at the upcoming meetings and So although we've had a little bit of variance to some of the key data points there Domestically probably not enough to really shift the dial for them to make a change this time round The final thing I'd mention on the calendar as UK GDP just a quick shout out that comes out at the end of the week The economy is expected to have marginally expanded in January partially recovering from the Contraction we registered at the end of last year in December But continuing generally the underlying weaker trend that we're Anticipating for the UK economy going forward analysts do expect of course a technical recession most likely in the UK in the first half of This year. However, it might not be that much of a surprise Obviously, this has been very much well priced into markets And if anything the fall in wholesale gas prices should help consumer bills Start to fall by the summer which could limit some of that damage to consumer spending in the more longer term So it might just soften a little bit at the deepness of that recession Which we've seen markets reprice in slightly in recent weeks. That is it from me So again, thanks for listening have a good week out there any questions at all Feel free to leave a comment and I'll see you next time take care