Noreen Burke

Investing.com — With the Federal Reserve almost certainly set to deliver a half-percentage-point rate hike at its upcoming meeting on Wednesday, investors will be awaiting further insights on its next steps to combat surging. The labor market is another key part of the Fed’s mandate and Friday’s U.S. employment report is expected to show that jobs growth remained robust in April. As investors consider the worst month of stocks for more than two decades, earnings will continue to rise as they contemplate this. One day later than the Fed on Thursday, the Bank of England expects to announce its fourth rate rise in succession. Here’s what you need to know to start your week.

1. Federal rate increases

With a half-percentage-point by the Fed already baked in, investors will be focusing on signals from Fed Chair Jerome Powell at his post-policy meeting press conference on the future path of interest rates, plans for reducing its almost $9 trillion balance sheet and the Fed’s view on when inflation may peak.

Investors and analysts are convinced that the Fed will keep surprising on the hawkish-side as it attempts to control inflation at its highest level in over 40 decades. It is fueling fears of a possible recession by tightening the money.

Future monetary policy tightening will depend on the Fed’s view as to how long inflation can continue at its current rate.

“If the Fed continues to expect high levels of inflation and they don’t see it moderating in the future, that will be a concern for investors,” Michael Arone, chief investment strategist at State Street Global Advisors, told Reuters.

It will be a sign that the Fed will keep raising rates and tightening monetary policy. This is what the market expects, perhaps even more.

2. Report on nonfarm payrolls

Friday’s nonfarm payrolls report is expected to show that the U.S. economy added jobs in April, while the unemployment rate is expected to tick down to . Expect another solid rise.

This jobs report follows data that showed the U.S. economy contracted unexpectedly in its first quarter. However, the decrease was mostly due to a larger trade deficit, as imports surged and slower inventory accumulation. The domestic market was strong, easing fears about a recession.

However, the outlook for economic growth continues to be clouded due to concerns about the economic effects of war in Ukraine and rising bond yields. There are also new coronavirus locksdowns in China which could hinder improvements in global supply chain improvement. The Fed is continuing its aggressive tightening of monetary policy.

3. Reports on earnings

The earnings season will be ongoing with investors keeping an eye on reports (NYSE, (NASDAQ:),(NASDAQ:),and (NYSE:) throughout the week.

April was the month that saw the largest drop in monthly income since early 2020’s coronavirus pandemic. Tech-heavy had its highest monthly decrease since the 2008 financial crisis.

Worries about Fed aggressive monetary tightening and downbeat results have hampered mega-cap technology investments and growth stocks.

The selloff accelerated on Friday as the S&P 500 tumbled 3.6% — its biggest one-day drop since June 2020 — following a disappointing earnings and guidance from (NASDAQ:) that sent the e-commerce giant’s shares down 14%.

4. Information on the economy

The economic calendar includes key reports on the next week’s economic news, such as the PMIs and earnings, and also the Fed meeting. These solid readings would support the belief that the economy will grow in the second quarter and keep Fed’s tightening plans alive.

On Tuesday the report is due, and then there are the figures a day later. The Labor Department is to publish the weekly report on on Thursday ahead of Friday’s nonfarm payrolls data.

5. Bank of England meeting

Widely expected, it will deliver its fourth straight rate rise when it meets on Thursday after the Fed. It was the first time that it has done so since 1997.

Andrew Bailey, BoE Governor, stated that the bank has a tight balance between reducing inflation (which at 7% exceeds its target) and trying to avoid a recession.

For the BoE’s to begin actively selling its bonds, it must raise quarter of its 1% rate.

The goal of active bond sales is to tighten monetary conditions. However, it could harm a weak economy. There are no central banks that have started the process.

This was submitted by Reuters