Last week, the U.S. released CPI and PPI data that exceeded expectations, impacting the U.S. stock market and Bitcoin, and also delaying the timing of interest rate cuts. This week, the Federal Reserve will release the latest meeting minutes, and several officials will give speeches, capturing investors’ attention.
The U.S. Bureau of Labor Statistics released the January CPI data on Tuesday, showing a year-on-year increase of 3.1%, higher than the market’s expected 2.9%. This almost eliminated the possibility of an interest rate cut by the Federal Reserve in March, causing both the U.S. stock market and Bitcoin to plummet.
However, the next day, Chicago Federal Reserve Bank President Austan Goolsbee reassured the market by stating that even if inflation exceeds expectations in the coming months, the Federal Reserve will still be on track to achieve its 2% inflation target. Goolsbee emphasized that inflation trends should not be judged based on a single month’s data, and that the Federal Reserve’s target is based on the Personal Consumption Expenditures Price Index (PCE) rather than the CPI, which may have “some significant differences.”
Encouraged by this, Bitcoin and the U.S. stock market rebounded once again. Now, let’s take a look at the potential events this week that could bring volatility to the market.
The Federal Reserve will release the minutes of its latest monetary policy meeting (January 30-31) on Thursday at 3 AM Taiwan time, which will be the focus of the market’s attention. Due to the higher-than-expected CPI and PPI data released last week, reflecting persistent inflationary pressures in the U.S., market expectations for a rate hike by the Federal Reserve in the first half of the year have become more pessimistic. The CME FedWatch data shows that the market believes there is a nearly 90% chance that the Federal Reserve will pause rate hikes in the March meeting, and the probability of keeping rates unchanged in the May meeting has also increased to 65.3%.
On the other hand, several Fed officials will give speeches this week, including Atlanta Federal Reserve Bank President Raphael Bostic, who has voting rights in the Federal Open Market Committee (FOMC) this year, and four board members who will speak on Wednesday, Thursday, and Friday, respectively.
NVIDIA, the chip giant with astonishing recent growth, will also release its Q4 2023 earnings (as of January 28, 2024) after the U.S. stock market closes on Wednesday. Analysts expect significant growth in profits and revenue due to the development of artificial intelligence (AI) at Bloomberg. Data shows that NVIDIA’s stock price has risen by 47% since the beginning of the year and surged by 230% in the past year. Loop Capital analysts predicted last Friday that NVIDIA’s strong momentum is far from over, giving it a “buy” rating and setting the highest target price on Wall Street at $1,200 per share.
As NVIDIA has a significant impact on the weighting of the S&P 500, if the earnings announcement deviates from market expectations, there may be a large-scale market volatility. In addition, several U.S. retail giants, including Home Depot and Walmart, will also release their latest earnings reports this week. As consumer spending accounts for two-thirds of the U.S. economic output, their reports can provide insights into the current financial situation of American households. Optimistic earnings may help withstand the risk of an economic recession.