Further information on the near-term direction of interest rates will be revealed by a variety of US data and European inflation statistics.

Eurozone

Preliminary statistics on inflation in the Eurozone this week will be eagerly monitored because, while another 50 basis point rate rise at the European Central Bank's forthcoming meeting in mid-March is probably inevitable, what happens after that is still up for question.

On Tuesday and Wednesday, preliminary February statistics from Germany, France, Spain, and Portugal are due. On Thursday, the flash number for the whole euro area is due.

Although the annual rate of inflation in the bloc decreased from 9.2% in December to 8.6% in January, the focus will likely remain on core inflation, which excludes volatile food and energy costs. Price pressures are lessening. It is anticipated that annual core inflation would register at 5.3%, mirroring January's estimate.

Thursday's figures are unlikely to satisfy hawkish ECB policymakers who are pressing for rapid rate rises to continue because inflation is still significantly higher than the ECB's 2% objective.

US Data

Concerns over a "no landing" scenario in which strong growth keeps prices high and compels the Federal Reserve to keep rates higher for longer have increased in response to official statistics released on Friday showing a robust comeback in consumer spending and increasing inflation.

This week, there are a lot of data points that will provide investors with new perspectives on the health of the economy, including updates on house sales, durable goods orders, and consumer confidence. On Wednesday and Friday, respectively, the ISM manufacturing and service sector reports for February will be made public.

Data on consumer confidence released on Tuesday may be of special importance since they provide a window into how people perceive the economy's outlook and inflation forecasts. After the surprise decline in the index in January, economists anticipate an increase to 108.5.

There won't be many Fed speakers this week, with Thursday's address on the economy by Governor Chris Waller serving as the week's high point.

Tough landing?

Stocks have declined this month after doing well in January as a number of economic reports increased anticipation that the Fed will need to raise interest rates and keep them there for longer than usual.

After significant losses on Friday, Wall Street's major indexes saw their worst weekly decline since 2023. The 3% drop was the largest weekly loss for the blue-chip Dow Jones since September. The Nasdaq fell 3.3% and the S&P 500 fell 2.7%, respectively.

Loretta Mester, president of the Cleveland Federal Reserve, stated on Friday that the Fed should increase interest rates if necessary to bring inflation under complete control.

Yet if data released over the coming days shows that inflation and growth are still strong, the stock and bond markets may decline much more.

Earnings

In the forthcoming week, high-profile retailers' earnings announcements will provide further information about the state of consumer spending and the impact of inflation on their bottom lines.

Target, a major retailer, is scheduled to report before the market opens on Tuesday. On Wednesday, Lowe's and discount retailer Dollar Tree are scheduled to report before the market opens. Nordstrom and Costco will announce results after the market close on Thursday, while Macy's and Best Buy are scheduled to report before the market opens.

Statistics from Walmart and Home Depot last week showed that despite rising costs, consumers are reducing their spending.

Estimates predict a 2.7% increase in sales for Target's most recent fiscal year, far less than the 6.7% increase Walmart announced.

(Investing.com, Reuters.com)