Morning Market Brief: January 22, 2024

Central bank decisions come into the spotlight?

This week will kickstart several central bank decisions. Attention will be on the Bank of Canada (BoC) as it makes its first interest rate announcement of 2024. Financial markets have started the year relatively unstable as investors try to predict when interest rate cuts will begin. Here is what to watch for this week.?

• The BoC will make its interest rate announcement. A Bloomberg survey shows economists expect the BoC to hold its benchmark overnight interest rate steady at 5.00% on Wednesday. Investors will, however, be searching for clues for when Canada’s central bank might start lowering rates this year.
• A preliminary estimate of critical Canadian sales figures will be shared. Statistics Canada will release its estimates on manufacturing sales on Thursday and wholesale sales on Friday.
• The US will release a plethora of key economic data. Manufacturing data will be released on Wednesday, an advanced estimate of fourth quarter gross domestic product on Thursday and the personal consumption expenditures price index, a key inflation gauge for the US Federal Reserve Board, on Friday.
• Two other major central banks will make interest rate decisions. The Bank of Japan will make its interest rate announcement tonight, while the European Central Bank will do so on Thursday.
• It will be a relatively light week for Canadian corporate earnings announcements. Key earnings announcements include Canadian National Railway and Novagold. Notable earnings announcements in the US include General Electric, 3M, Netflix, IBM, Tesla, Blackstone, Intel, Visa and American Express.

All the predictions on central bank actions will transpire this week and next. While most of the major central banks are expected to hold steady, investors will need to parse through their accompanying statements and comments for clues on when policy loosening will begin. Central bank actions could cause some swings in financial market performance over the next couple of weeks. They will likely be among the key themes in financial markets this year.

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