Investing.com -- It’s set to be a busy week with U.S. jobs data, Federal Reserve meeting minutes and several Fed speakers along with inflation data out of the Eurozone and China. Meanwhile U.S. markets are due to remain closed on Thursday in honor of former President Jimmy Carter. Here’s your look at what’s happening in markets for the week ahead.
-
Jobs report
Friday’s employment report is expected to show that the U.S. economy added 154,000 jobs in December, while the unemployment rate is expected to hold steady at 4.2%.
Labor market data has been volatile in recent months amid disruptions from strikes and hurricanes. November data showed growth of 227,000 jobs, rebounding from a tepid rise in October.
With investors barely pricing in two rate cuts from the Federal Reserve this year the data is likely to remain consistent with a gradually slowing, but still solid labor market.
Ahead of Friday’s report, investors will get other updates on the strength of the labor market. The U.S. is to release monthly data on JOLTS job openings on Tuesday, followed by a data on private sector hiring and the weekly report on initial jobless claims on Wednesday, which is being released a day early ahead of Thursday’s National Day of Mourning.
-
Fed minutes, speakers
On Wednesday the Fed is to release the minutes of its December meeting where it delivered its third straight 25-basis point rate cut in what Chair Powell described as a "closer call".
“Given Powell’s description of the meeting and the dissent from Cleveland’s Hammack, we suspect that the minutes will detail a divergence in views on the appropriate action at the meeting,” analysts at Deutsche Bank said in a note. “We will also look for clues about how officials reflected upcoming changes to fiscal, trade and immigration policies in their forecasts.”
Investors will also get a chance to hear from several Fed officials during the week with speeches from Governors Cook and Waller on Monday and Wednesday, respectively likely to be the highlights. Richmond Fed President Thomas Barkin and Philadelphia Fed President Patrick Harker are also due to deliver remarks.
-
Stock markets
Stocks faltered at the end of December and the start of January, after a strong year. The benchmark S&P 500 closed out 2024 with a 23% rise and posted its biggest two-year gain since 1997-1998.
Prospects for a third straight standout year hinge in part on the strength of the economy, with labor market data among the most important reads into the economy’s health.
The data could also help clarify the outlook for interest rates after the Fed last month rattled markets by pivoting to a more cautious outlook for rate cuts as it lifted its forecast for expected inflation in 2025.
Investors are wary of the jobs report revealing an overly strong economy, with a revival of inflation under the incoming Trump administration seen as one of the key risks to markets early in the year.
-
Inflation data
Expectations for additional rate cuts from the European Central Bank will be tested by Tuesday’s December flash Eurozone inflation data. German and French inflation numbers are due Monday.
Any signs that inflation is easing further would give the ECB scope to loosen policy and support a struggling economy.
Meanwhile, China is to release consumer and producer price inflation data on Thursday. The annual rate of inflation was almost flat in December while PPI was in contraction territory, indicating that government stimulus measures have still not succeeded in bolstering demand.
-
Oil prices
Oil prices ended last week higher as the demand outlook was boosted by cold weather in Europe and the U.S. along with additional economic stimulus flagged by China.
Brent posted a 3.3% weekly gain, while crude oil WTI futures posted a 5% increase.
Oil prices look likely to remain supported amid expected increased demand for heating oil after forecasts for colder weather in some regions.
Data last week showing a decline in U.S. crude inventories also underpinned prices.
But oil’s gains look likely to be held in check by the stronger dollar which has strengthened on expectations that the U.S. economy will continue to outperform its peers globally this year and that U.S. interest rates will stay relatively higher.