A slow start to the week in markets but there’s plenty still to come

It’s been a slow start to the week in the markets as investors have an eye on what’s to come with earnings season getting into full flow and major economic releases on the agenda.

We’ve reached an interesting moment in which investors have been forced to retreat on post-SVB positioning on rate hikes, albeit not entirely, but they seem far from convinced that central banks will actually follow through and, if they do, that they will not reverse course.

Credit conditions have tightened

The reason for the apprehension is that early evidence suggests credit conditions have tightened in the aftermath of the mini-banking crisis but the extent to which it has happened, what the real economic consequences are, and what exactly it means for interest rates isn’t clear.

And this is occurring at a time when inflation appears very stubborn but is set to fall sharply due to favourable base effects but the pace of disinflation is ultimately what, along with credit conditions, will determine how central banks respond. I feel things may look very different in a couple of months’ time but for now, we have to patiently play the waiting game.

Earnings season is obviously giving us plenty of food for thought in the interim but the first day of the week isn’t typically the most thrilling and we’re seeing another example of that today. Stock markets are treading water and we may see that continue throughout the rest of the session.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam