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Big banks’ earnings and a hot inflation report could sway markets in short holiday week


Trader at the NYSE on March 11, 2022.

Source: NYSE

Markets will be facing a volatile inflation report over the next week, as well as a series of earnings from big banks to kick-off the earnings season.

JPMorgan ChaseAnd BlackRockStart Wednesday’s financial industry first-quarter earnings reports with Citigroup, Wells Fargo, Morgan StanleyAnd Goldman SachsReporting Thursday

Investors will continue to monitor the situation in Ukraine for signs of improvement.

Quincy Krosby is chief equity strategist for LPL Financial. He stated that the market will value the earnings reports of the financial sector’s first quarter, given the Federal Reserve’s impact. plans to raise interest ratesAdopt a stricter policy.

Krosby stated, “We would like to see how they view the Fed’s plans…quantitative tightening and the liquidity drain coupled with higher rates affecting their clients, their business units.” The XLF is a good example. [Financial Select Sector SPDR Fund ETF]On days when it rises, it is the insurance companies who are raising their premiums. Banks love higher interest rates, but the truth is that they are actually going to be more detrimental than the banks.

This week: the Dow Jones Industrial AverageHowever, the Nasdaq Composite which measures interest rates is more sensitive than the Nasdaq is flat. It is however still down by over 3% The jump in the 10-year TreasuryMichael Schumacher from Wells Fargo said that the yield reached 30 basis points. A basis point equals 0.01%.

The 10-year bond rose more than 2.7% Friday.

Schumacher said that it was jet fuel. Schumacher said that the Fed signalling it will trim its balance by $95 billion per month and increase the yield on the 10-year bond, which is inversely related to price, gave the market a lift in the last week.

As a benchmark, the 10-year rate is crucial as it affects mortgages and any other loans.

Schumacher said that people are saying that the balance sheet will cause the 10s’ to move quite significantly. Schumacher said it was impossible to rule out an increase in the yield of 3% given how fast the yield moved.

In the next week, economic data may be an indicator of a new move up.

There are many economic reports throughout the four-day holiday week. On the Good Friday holiday, some will be published. It is anticipated that Tuesday’s report on March’s consumer prices index will be the most important. This index is forecast to exceed 7.9% in February.

“It’s big. Schumacher said that it’s the final key data point prior to the Fed meeting May 3. Markets will expect the Fed to hike rates by 50% at the meeting, even if it is hot. In March, the Fed started its rate-hiking cycle with a quarter point increase.

The producer price index can be found here set for release on Wednesday. On Thursday, data on consumer sentiment and retail sales will be released. On Friday, Empire State Manufacturing and Industrial Production will be released.

Barclays economists predict that CPI will rise 1.24% in March. This is in addition to gaining an astonishing 8.5% year over year, which was the highest level in more than 40 years. The economists stated that they expect CPI’s annual rate to reach its peak in March, and then decline thereafter due to positive base effects.

Personal consumption expenditures is the Fed’s favorite inflation measure. is released April 29However, CPI and PPI both will set the tone.

“We have seen such an abrupt move in yields. “Sentiment in rates is so negative, I don’t think it would surprise if there was a rally after seeing the March CPI,” stated Peter Boockvar chief investment officer of Bleakley Advisory Group.

While inflation pressures will still be there, I believe March would be the highest inflation rate on an annual rate-of-change basis… There could be some rotation [in stocks]Boockvar stated, “Next Week if there is a bond bounce.”

Schumacher indicated that investors will be monitoring the Bank of Canada to see if there is a rate increase, as well as the European Central Bank’s comments about its bond purchases on Thursday.

Season for earning

Refinitiv reports that S&P 500The earnings will rise by 6.1%, while the financial sector should see a drop of 22.9%.

Krosby, LPL’s CEO, expects to experience choppy trades. According to her, she believes it will be difficult quarter. Investors will closely follow the reaction of the market to a 50 basis-point increase in interest rates, she said. Also a form of policy tightening, quantitative tightening (also known as balance sheet reductions or QT) is also possible.

The QT could begin next month. There is a sense [the Fed]She said, “I can’t wait any more.”

Krosby stated that she favors a defensive approach, favoring consumer staples as well as real estate investment trusts. Krosby also recommends consumer discretionary names, which emphasize consumer cost savings.

Schumacher stated, “I think at the end next week, with a long weekend ahead. People will want to reduce risk but I suspect that it could be quite rocky with CPI before this happens.”

Week ahead calendar


9:00 a.m. Fed President Michelle Bowman, Fed governor Christopher Waller at “Fed Listens!” event

Atlanta Fed President Raphael Bostic at 9:30 AM

Chicago Fed President Charles Evans at 12:45

1 p.m. $46 billion 3-year note auction


Earnings: Albertsons, Carmax

NFIB Small Business Survey at 6:00 AM

8:30 AM CPI

12.10 pm Fed Governor Lael brainard speaking at The Wall Street Journal’s Jobs Summit

1:00 p.m. $34 billion 10-year note auction

2:00 p.m. Federal budget

6:45 p.m. Richmond Fed President Tom Barkin


Earnings: JPMorgan, BlackRock, Delta Air Lines, Bed Bath & Beyond, Rent the Runway, Fastenal, Infosys, First Republic Bank

8:30 a.m.

12:00 p.m. 30 year bond auction


Earnings: Goldman Sachs, Citigroup, Wells Fargo, Morgan Stanley, US Bancorp, UnitedHealth, PNC Financial, Rite Aid, Ally Financial, State Street

8:30 a.m. 8:30 a.m.

8:15 a.m.

8:30 a.m. 8:30 a.m.

10:00 a.m. Consumer sentiment

10:00 a.m. Inventory of businesses

2:20 p.m. Early closing of the bond market

3:50 p.m. Cleveland Fed President Loretta Mester

Philadelphia Fed President Patrick Harker


Good Friday holidays: Markets closed

8:30 a.m. Empire State manufacturing

9:15 a.m. Industrial production

4:00 p.m. TIC information