Preparing for the Fed; the US Retail Sales Failing

17 มี.ค. 2021

The financial markets' attention in the first half of this week is on Biden's incentives, his plans for tax reform and Treasury bond yields, and also on the forthcoming meeting results announcement of the Federal Open Market Committee of the Federal Reserve today.

In our opinion, the markets are trying to create an intrigue while there's none, yet. All this inflation and rate hikes-related talk is more than premature, and Powell talks about it in every public appearance. Yes, the Fed may be slightly modifying its plans for 2023. But these plans' price in the current reality is close to zero.

Yes, the new stimulus package in theory is fraught with a jump in inflation, but the Yellen plainly stated that there's nothing to be afraid of and she doesn't see a threat.

What can we expect from today's Fed meeting, then? Perhaps, economic development forecasts' revisions. Still, the stimulus package is really large and cannot but accelerate the economic recovery.

As for the rest, we don't expect any revelations or surprises to happen.

By the way, as for the surprises: yesterday's data on the US retail sales came out very weak and pretty worse than expected. But again, sprinkling ashes on the head and giving up on economic recovery aren't worth it. The indicator is chain, so that the overestimated base of the previous period invariably affects the current period's results. In addition, abnormal frosts came as a shock to the consumer sector, which is reflected in the data. In general, nothing terrible happened.