As the Federal Reserve's meeting looms in March, investors' attention pivots towards the question of when the Fed will commence its interest rate cuts. Consequently, macroeconomic concerns will hold a central position for investors in the first trading week of March.
Chairman Jerome Powell is set to deliver semi-annual monetary policy updates to the House of Representatives on Wednesday and the Senate on Thursday. Investors will meticulously scrutinize these statements for any insights into when interest rates might be lowered.
Currently, markets do not anticipate a significant point cut in the first quarter either in March or May; instead, the cut is expected to commence in June.
The Chairman's testimonies before Congress will gain further significance, especially following recent consumer and producer price reports, reminding investors that reaching the Fed's 2% inflation target may not be straightforward. Powell is expected to address these concerns and alleviate investor apprehensions.
On the other hand, the Non-Farm Payrolls report, due on Friday, is anticipated to reveal a 225,000 increase in employment in the United States for February, signaling a decline from the previous month. This report could underscore the economy's remarkable ability to sustain employment despite a tight monetary policy, thereby strengthening the possibility of a soft landing for the economy.
Market participants will assess the interest rate outlook amidst a bullish market environment. For instance, Bitcoin surged past $62,000 in February, marking its best month since 2020. Moreover, more Wall Street strategists are revising their year-end S&P 500 forecasts upwards. However, some investors remain wary of certain warning signals in the market. For example, while Nvidia soared by 65% this year, Apple dipped by over 7%. This discrepancy raises concerns that low market volatility could incentivize investors to take on greater risks, potentially leading to a larger downside.
