Markets.com Logo
euEnglish
LoginSign Up

Week Ahead: Federal Reserve set to hike

May 1, 2022
17 min read
Table of Contents

    Attention this week is firmly on the Federal Reserve, which is widely expected to raise rates again. Also in action in a busy week for central banks are the Reserve Bank of Australia and the Bank of England. Meanwhile earnings season continues with names including Shopify, Airbnb and Peloton. 

    Federal Reserve 

    Over a week ago Fed chair Jay Powell stressed that taming inflation is “essential” and said a 50bps hike is on the table in May.  

    Last month Lael Brainard, a Fed governor and vice-chair in-waiting, and notably the leading voice on the more dovish wing of the FOMC, began a speech with quotes from Paul Volcker. “Forty years ago, Paul Volcker noted that the dual mandate isn’t an either-or proposition and that runaway inflation ‘would be the greatest threat to the continuing growth of the economy… and ultimately, to employment’.”  

    She then went on to quote another former Fed chair, Arthur Burns, who noted in the late 1960s that “there can be little doubt that poor people…are the chief sufferers of inflation”.  

    That’s now the two big beasts channelling Volcker. On March 3rd, Senator Shelby asked Powell: “Volcker put the economy in a recession to get inflation under control. Are you prepared to do what it takes to get inflation under control?” Powell replied: “I hope history will record that the answer to your question is yes.” Hawkish credentials assured, 50bps of hikes in May and June are nailed on.  

    Market is pricing for aggressive rate hike cycle with multiple 50bps hikes to 1.9% by August and 2.7% by the end of the year, a level at which it would be actively restraining potential. It would be the swiftest pace of rate hikes since the Volcker era. Hawk James Bullard has even floated the idea of a 75bps hike. 

    A lot the questions will be about where policymakers expect to go over the coming months and whether they see the terminal rate going up. After the Fed meeting on Wednesday, attention shifts to the US nonfarm payrolls report on Friday, though this has lost some importance given the Fed’s hawkish pivot. 

    Bank of England 

    UK inflation surged to 7% in March, the highest reading in 30 years. Bank of England governor Andrew Bailey is worried about persistently high inflation but warned policymakers are walking a ‘fine line’ trading off the need to tackle inflation with the risk of sparking a recession that further hurts consumers. Despite worries about slowing growth, a tight labour market gives the BoE the room to raise rates for the fourth straight meeting next week. This would take the base rate to 1%, its highest since 2009. Does it offer any relief for sterling? GBPUSD has been crushed by the dollar steamroller – a hawkish BoE could help ease the pain. Markets are already pricing for the Bank to raise rates to 2.5% by this time next year. The risk for sterling bulls right now is that the BoE disappoints like it has in the past. However we might already be at the peak of central bank divergence thinking that has driven the dollar to multi-year highs.

    Reserve Bank of Australia 

    The RBA has been sliding gently into a position to tighten policy over the last few months and it could be ready to surprise the market with a rate hike this week. Unemployment has fallen to a record low 4% and inflation in the first quarter has ballooned to 5.1%. Key wage data – which needs to be at 3% inflation – is not released until after the meeting, but the RBA might not wait. Whether it hikes or not, relief for the AUD is likely to be limited due to the situation in China and broad weak macro environment. 

     

    Earnings Season 

    02.05  03.05  04.05  05.05  06.05 
     Arista Networks (ANET) AMC 

     

     Pfizer (PFE) PMO 

     

    Activision Blizzard (ATVI) E 

     

    Advanced Micro Devices (AMD) AMC 

     

    Airbnb (ABNB) AMC 

     

    Starbucks Corp (SBUX) AMC 

     

    Barrick Gold (GOLD) PMO 

     

    Lumentum Holdings (LITE) PMO 

     

    Moderna (MRNA) PMO 

     

    Twilio (TWLO) AMC 

     

    Uber Technologies (UBER) AMC 

     

     Ball Corp (BLL) PMO 

     

    Shopify (SHOP) PMO 

     

    Block Inc (SQ) AMC 

     

    Illumina (ILMN) AMC 

     

    Lucid Group (LCID) AMC 

     

    Peloton (PTON) E 

     

    Virgin Galactic (SPCE) AMC 

     

     
     Alibaba (BABA) E 

     

     

    Major economic data 

    Mon May 2  All Day  CNH    Bank Holiday 
      1:30am  JPY    Final Manufacturing PMI 
      2:00am  AUD    MI Inflation Gauge m/m 
      2:30am  AUD    ANZ Job Advertisements m/m 
      6:00am  JPY    Consumer Confidence 
      7:00am  EUR    German Retail Sales m/m 
      7:30am  AUD    Commodity Prices y/y 
      8:00am  CHF    SECO Consumer Climate 
      All Day  GBP    Bank Holiday 
      8:15am  EUR    Spanish Manufacturing PMI 
      8:30am  CHF    Manufacturing PMI 
      8:45am  EUR    Italian Manufacturing PMI 
      8:50am  EUR    French Final Manufacturing PMI 
      8:55am  EUR    German Final Manufacturing PMI 
      9:00am  EUR    Final Manufacturing PMI 
        EUR    Italian Monthly Unemployment Rate 
      2:30pm  CAD    Manufacturing PMI 
      2:45pm  USD    Final Manufacturing PMI 
      3:00pm  USD    ISM Manufacturing PMI 
        USD    Construction Spending m/m 
        USD    ISM Manufacturing Prices 
      Tentative  USD    Loan Officer Survey 
      11:45pm  NZD    Building Consents m/m 
    Tue May 3  All Day  JPY    Bank Holiday 
      All Day  CNH    Bank Holiday 
      5:30am  AUD    Cash Rate 
        AUD    RBA Rate Statement 
      7:45am  EUR    French Gov Budget Balance 
      8:55am  EUR    German Unemployment Change 
      9:30am  GBP    Final Manufacturing PMI 
      10:00am  EUR    PPI m/m 
        EUR    Unemployment Rate 
      All Day  EUR    Eurogroup Meetings 
      3:00pm  USD    JOLTS Job Openings 
        USD    Factory Orders m/m 
      All Day  USD    Wards Total Vehicle Sales 
      Tentative  NZD    GDT Price Index 
      10:00pm  NZD    RBNZ Financial Stability Report 
      11:30pm  AUD    AIG Construction Index 
      11:45pm  NZD    Employment Change q/q 
        NZD    Unemployment Rate 
        NZD    Labor Cost Index q/q 
    Wed May 4  12:01am  GBP    BRC Shop Price Index y/y 
      All Day  JPY    Bank Holiday 
      All Day  CNH    Bank Holiday 
      2:00am  NZD    ANZ Commodity Prices m/m 
      2:30am  AUD    Retail Sales m/m 
      7:00am  EUR    German Trade Balance 
      8:00am  EUR    Spanish Unemployment Change 
      8:15am  EUR    Spanish Services PMI 
      8:45am  EUR    Italian Services PMI 
      8:50am  EUR    French Final Services PMI 
      8:55am  EUR    German Final Services PMI 
      9:00am  EUR    Final Services PMI 
      9:30am  GBP    M4 Money Supply m/m 
        GBP    Mortgage Approvals 
        GBP    Net Lending to Individuals m/m 
      10:00am  EUR    Retail Sales m/m 
      Tentative  EUR    German 10-y Bond Auction 
      1:15pm  USD    ADP Non-Farm Employment Change 
      1:30pm  CAD    Trade Balance 
        USD    Trade Balance 
      2:45pm  USD    Final Services PMI 
      3:00pm  USD    ISM Services PMI 
      3:30pm  USD    Crude Oil Inventories 
      7:00pm  USD    FOMC Statement 
        USD    Federal Funds Rate 
      7:30pm  USD    FOMC Press Conference 
    Thu May 5  All Day  JPY    Bank Holiday 
      2:30am  AUD    Building Approvals m/m 
        AUD    Trade Balance 
      2:45am  CNH    Caixin Services PMI 
      7:00am  EUR    German Factory Orders m/m 
      7:30am  CHF    CPI m/m 
      7:45am  EUR    French Industrial Production m/m 
      9:30am  GBP    Final Services PMI 
      Tentative  EUR    Spanish 10-y Bond Auction 
      All Day  All    OPEC-JMMC Meetings 
      Tentative  EUR    French 10-y Bond Auction 
      Tentative  GBP    10-y Bond Auction 
      12:00pm  GBP    BOE Monetary Policy Report 
        GBP    MPC Official Bank Rate Votes 
        GBP    Monetary Policy Summary 
        GBP    Official Bank Rate 
      12:30pm  USD    Challenger Job Cuts y/y 
      1:30pm  USD    Unemployment Claims 
        USD    Prelim Nonfarm Productivity q/q 
        USD    Prelim Unit Labor Costs q/q 
      3:30pm  USD    Natural Gas Storage 
      11:30pm  AUD    AIG Services Index 
    Fri May 6  12:30am  JPY    Tokyo Core CPI y/y 
      12:50am  JPY    Monetary Base y/y 
      2:30am  AUD    RBA Monetary Policy Statement 
      6:45am  CHF    Unemployment Rate 
      7:00am  EUR    German Industrial Production m/m 
        GBP    Halifax HPI m/m 
      7:45am  EUR    French Prelim Private Payrolls q/q 
      8:00am  CHF    Foreign Currency Reserves 
      9:00am  EUR    Italian Retail Sales m/m 
      9:30am  GBP    Construction PMI 
      1:30pm  CAD    Employment Change 
        CAD    Unemployment Rate 
        USD    Average Hourly Earnings m/m 
        USD    Non-Farm Employment Change 
        USD    Unemployment Rate 
      3:00pm  CAD    Ivey PMI 
      8:00pm  USD    Consumer Credit m/m 
      9:00pm  USD    FOMC Financial Stability Report 

     


    Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

    Written by
    SHARE

    Markets

    • Palladium - Cash

      chartpng

      --

      0.62%
    • EUR/USD

      chartpng

      --

      -0.02%
    • Cotton

      chartpng

      --

      0.06%
    • AUD/USD

      chartpng

      --

      0.34%
    • Santander

      chartpng

      --

      2.60%
    • Apple.svg

      Apple

      chartpng

      --

      0.56%
    • easyJet

      chartpng

      --

      0.00%
    • VIXX

      chartpng

      --

      -0.29%
    • Silver

      chartpng

      --

      0.44%
    Table of Contents

      Related Articles

      Stock market today: Nasdaq rallied to new highs as Nvidia hits $4T valuation

      Stock market today: the Nasdaq Composite Index surged to new highs today, fueled primarily by Nvidia’s unprecedented achievement of reaching a $4 trillion market valuation.

      Ghko B|about 15 hours ago

      Datadog (DDOG) Joins S&P 500: What’s the Datadog stock price target in 2025?

      Datadog (DDOG) Joins S&P 500: Datadog, a leading provider of monitoring and analytics for cloud-scale applications, recently achieved a significant milestone by joining the S&P 500.

      Ghko B|about 15 hours ago

      Morning Note: Stocks Hold as Fed Cautious; Bitcoin Soars; RBA CBDC Trials

      U.S. stocks held their ground after the release of the Federal Reserve’s minutes from its June 17–18 meeting, which revealed that only a few officials anticipated rate cuts as early as this month.

      Tommy Yap|about 15 hours ago
      Markets.com Logo
      google playapp storeweb tradertradingView

      Contact Us

      support@markets.com+12845680155

      Markets

      • Forex
      • Shares
      • Commodities
      • Indices
      • Crypto
      • ETFs
      • Bonds

      Trading

      • Trading Tools
      • Platform
      • Web Platform
      • App
      • TradingView
      • MT4
      • MT5
      • CFD Trading
      • CFD Asset List
      • Trading Info
      • Trading Conditions
      • Trading Hours
      • Trading Calculators
      • Economic Calendar

      Learn

      • News
      • Trading Basics
      • Glossary
      • Webinars
      • Traders' Clinic
      • Education Centre

      About

      • Why markets.com
      • Global Offering
      • Our Group
      • Careers
      • FAQs
      • Legal Pack
      • Safety Online
      • Complaints
      • Contact Support
      • Help Centre
      • Sitemap
      • Cookie Disclosure
      • Regulation
      • Awards and Media

      Promo

      • Gold Festival
      • Crypto Trading
      • marketsClub
      • Welcome Bonus
      • Loyal Bonus
      • Referral Bonus

      Partnership

      • Affiliation
      • IB

      Follow us on

      • Facebook
      • Instagram
      • Twitter
      • Youtube
      • Linkedin
      • Threads
      • Tiktok

      Listed on

      • 2023 Best Trading Platform Middle East - International Business Magazine
      • 2023 Best Trading Conditions Broker - Forexing.com
      • 2023 Most Trusted Forex Broker - Forexing.com
      • 2023 Most Transparent Broker - AllForexBonus.com
      • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
      • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
      • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
      • 2024 Leading CFD Broker Africa - Brands Review Magazine
      • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
      • 2024 Best Mobile Trading App MENA - Brands Review Magazine
      • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
      • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
      LegalLegal PackCookie DisclosureSafety Online

      Payment
      Methods

      mastercardvisanetellerskrillwire transferzotapay
      The markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

      High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

      For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

      Markets.com operates through the following subsidiaries:

      Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

      Finalto International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

      Close
      Close

      set cookie

      set cookie

      We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.