Top 5 things to watch in the markets in the coming week from Investing.com

By Noreen Burke

Investing.com – The equity turmoil triggered by rapidly rising Treasury yields should continue to be a major focus for markets over the coming week, especially if stronger economic data pushes Treasury yields even higher. Investors will focus on Friday’s jobs report, which is expected to show virus restrictions held back job growth in February. The appearances of several Federal Reserve speakers, including President Jerome Powell, will also be closely followed. The OPEC + coalition is expected to increase oil production moderately at its meeting on Thursday, with prices close to 13-month highs. In Europe, the UK budget is due on Wednesday, while economic data from the euro zone will show how the economy is coping with the current restrictions of the pandemic. Here’s what you need to know to start your week.

1. Tug of war between stocks, rising bond yields

The shift to energy, financial and other stocks, which are expected to benefit from the economic reopening, has accelerated, while rapidly rising Treasury bill yields put pressure on tech stocks that have driven market gains for decades. years.

Tech stocks are particularly sensitive to rising yields because their value relies heavily on future earnings, which are discounted more deeply when interest rates rise.

An accommodating Fed and expectations for more stimulus have propelled yields higher and fueled concerns about inflation and the two-way market is likely to continue, at least in the short team.

Meanwhile, the earnings season is coming to an end, but retailers will continue to report, with Target (NYSE :), Kohl’s (NYSE 🙂 and Nordstrom (NYSE 🙂 are expected to release their numbers on Tuesday, followed by Costco (NASDAQ 🙂 on Thursday.

2. February Jobs Report

With President Joe Biden’s $ 1.9 trillion coronavirus relief package, February’s February non-farm payrolls report will show how the labor market recovery is playing out.

Government data at the end of last week showed that initial jobless claims have unexpectedly fallen to their lowest level in three months, indicating that the slowdown in the infection rate is allowing the labor market to gain ground . Retail sales also rebounded in January.

Economists expect the US economy to create new jobs in February, following the 49,000 increase in January. But the winter storms that have swept through the south can complicate the picture.

3. Powell speech

With T-bill yields rising rapidly, stock market investors can hope that Fed officials tackle the sale of T-bills.

Fed Chairman Jerome Powell is scheduled to speak on the economy at an online event hosted by the Wall Street Journal on Thursday. So far, there have been few signs of concern among Fed officials over rising Treasury yields.

Last week, Powell said the rise was the result of a stronger economy, but added that the rate of economic recovery has slowed in recent months and reiterated that monetary policy will remain easy for some time.

New York Fed Chairman John Williams, Fed Governor Lael Brainard, Atlanta Fed Chairman Raphael Bostic, San Francisco Fed Chairman Mary Daly, Philadelphia Fed Chairman Patrick Harker and Chicago Fed Chairman Charles Evans are other Fed officials making appearances.

4. OPEC + meeting

With oil prices at 13-month high, the OPEC + producer meeting on Thursday is expected to discuss increased production from April.

The Organization of the Petroleum Exporting Countries and its allies known as OPEC + cut production by 9.7 million barrels a day last year as the pandemic ravaged global demand.

OPEC + sources estimate that a production increase of 500,000 bpd appears possible without causing inventory build-up as economies recover.

Russia is keen to increase supply. Saudi Arabia’s voluntary 1 million bpd reduction also expires in March, and that supply could return from April.

5. UK budget, euro area data

In the UK, Finance Minister Rishi Sunak will pledge more budget spending on Wednesday, but it may be the last pandemic-related support he offers. The budget is expected to stack more borrowing on top of nearly 300 billion pounds ($ 418 billion) in COVID spending and tax cuts.

The fiscal plan will be closely watched as it will be one of the main factors determining the pace of economic recovery.

Meanwhile, in the euro area, PMI data and will show how the economy is doing ahead of the European Central Bank’s March meeting.

–Reuters contributed to this report