The month of March is going to be a huge one, as Democrats race against the clock to implement their stimulus package.
US
After passing through the House, Joe Biden’s American Rescue Plan is off to a far trickier arena – the US Senate.
To pass the bill via the budget conciliation method, every single Democrat will need to vote in favour of the package – an issue, given that a couple of supposedly blue senators have concerns over raising the minimum wage to $15 an hour. How that issue is amended or resolved is going to be crucial for the overall success of the bill, and will be closely watched by investors.
Equity markets will also be on high alert for rising bond yields, after February came to a deleterious end due to falling bond prices. All this hinges on the potential for a surge in inflation as the global economy recovers – a recovery that will, in part, be driven by Biden’s $1.9 trillion package – and the measures central banks make take to combat that scenario. The big, as-yet unanswerable question is whether this fear of rising inflation is justified.
The third major item on the US agenda this week is Friday’s nonfarm jobs report. For 4 of the last 5 months, the reading has drastically underperformed expectations, including the negative number seen for December.
The reading did rebound in January, if not at the pace analysts were expecting, while there were positive signs elsewhere, with the unemployment rate dropping to its lowest level since last April.
This time out, analysts are forecasting another improving figure, up from 49,000 in January to 111,000 in February.
Before that, there’re the final Markit and ISM manufacturing PMIs on Monday and the services equivalent on Wednesday, alongside the ADP) nonfarm reading, while Thursday has factory orders and the usual jobless claims number.
As for earnings, one of the most intriguing releases is Zoom’s fourth quarter figures on Monday. One of the major pandemic success stories, the pressure is going to be on the video chat app to pitch its value once things start to go back to normal (hopefully) in the coming months. In terms of the figures themselves, estimates would indicate a 420% surge in earnings to $0.78 off a 330% jump in sales to $809 million.
UK
Gripped by the same bond-led sell-off seen elsewhere, the FTSE and pound both struggled as February came to a close.
And there’s nothing on the agenda, data-wise at least, to help them recover as March gets underway.
The final manufacturing PMI reading for February is joined by mortgage approvals and net lending to individuals on Monday, followed by the final services PMI on Wednesday, the construction PMI on Thursday, and the Halifax HPI on Friday.
That likely leaves the UK markets at the mercy of wider macro – i.e. US – movements.
In terms of corporate releases, Taylor Wimpey (LON:TW) and Fresnillo (LON:FRES) update on Tuesday, Persimmon (LON:PSN) on Wednesday, Galliford Try (LON:GFRD) and Rentokil Initial (LON:RTO) on Thursday, and Pearson PLC (LON:PSON) on Friday.
Eurozone
There’s another steady stream of data out of the Eurozone this week, likely to be competing with bond yield anxiety and whatever happens with the US stimulus package.
The region-wide manufacturing PMIs are on Monday, with inflation on Tuesday, services PMIs on Wednesday, retail sales and the unemployment rate on Thursday, and the German factory orders on Friday.
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