July 22, 2024

Higher rates rattle investors

LQDFXperts Features | Higher rates rattle investors

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Investors fear the Fed’s aggressive higher rates will plunge the economy into a recession, followed by Friday’s unexpectedly strong U.S. nonfarm payrolls report. 

The Labor Department reported Friday that the economy added 517,000 jobs in January, almost three times what was expected. 

The year began amid fears of a looming recession, only for those to subside, if not completely disappear, as China reopened and Europe enjoyed a warm winter. That raised hopes of a “soft landing”.

Now there’s talk on Wall Street of a “no landing” after Friday’s news. 

Last week Powell acknowledged progress in the fight against inflation. But the unexpectedly strong jobs data has given the central bank more leeway to keep hiking rates. 

Investors will be closely watching an appearance by Fed Chair Jerome Powell on Tuesday. 

Higher rates rattle investors – What else

It’s set to be a much quieter week on the economic calendar. 

The Reserve Bank of Australia set higher rates again, while investors will keep an eye on Eurozone and UK data. Traders will also closely watch comments by European Central Bank officials after the ECB hiked rates by 50 basis points last Thursday and all but promised more of the same in March. 

Last week the Bank of England said Britain remained set for a recession this year. But it was likely to be “much shallower” than previously feared due mostly to lower energy prices and weaker market interest rate expectations. 

An update on the labour market with Thursday’s initial jobless claims numbers will take place. Several other Fed officials are also scheduled to make appearances. 

The U.K. is to release gross domestic product data on Friday. Experts expect data to show that the economy flatlined in the fourth quarter, narrowly avoiding a recession. 

For more market events, watch our Economic Calendar. Did you spot your trading opportunity?