This Week Ahead: Economic Data & SVB Testimony

March has certainly been an eventful month for the markets and the global economy as factors ranging from the banking crisis to rising inflation and ensuing interest rate hikes continued to put a strain on economic growth. As such, with the final week of March nearing its end, traders, investors, and analysts alike may want to keep an eye out for this week’s upcoming market events, as these may help them navigate some of the market uncertainty that prevailed these past few months. From inflation data to SVB testimony, here’s what you need to know about this week ahead:

Banking Crisis Update: SVB Testimonies and Hearings

The collapse of Silicon Valley Bank (SVB) on March 10th, 2023 indisputably sent shockwaves through the banking sector, in particular, and the overall markets in general, as many major banks and financial institutions suffered the consequences. Credit Suisse (CSGN.VX) suffered insurmountable losses amidst the market volatility and jitters created by SVB’s fall among other factors and was even purchased by its rival UBS (UBSG.VX). Other big banks like JP Morgan (JPM), Wells Fargo (WFC), and Bank of America (BAM) also fell by 6.5%, 12.3%, and 10.3% since SVB’s fallout, perhaps driven by the market fears surrounding the fate of banking stocks.

More recently, Deutsche Bank, Germany's biggest bank, also made the headlines as it slid by 20.2% since SVB’s collapse which further increased market fears as some even compared it to Credit Suisse. Nonetheless, some analysts calmed the storms by stating that the German big bank will probably not wind up like Credit Suisse. 

Accordingly, this week, traders who seek to find some answers to the latest banking crisis may want to watch out for the upcoming SVB testimony and hearings on Tuesday, March 28th, when Bank of England’s (BoE) Governor, Andrew Bailey, and deputy governors Sam Woods and Dave Ramsden, are expected to testify on SVB. In addition, US Congress members are expected to inspect regulators and question them about SVB’s and Signature Bank’s collapses while Federal Reserve officials and Treasury members are also expected to testify on SVB’s collapse on Tuesday and Wednesday. The goal behind these hearings is to understand the banking falls better and know what might have led to them. (Source:Yahoo Finance)

Key Economic Data Releases: GDP, Consumer Confidence, &  Inflation  

As inflation continues to reign over the economic realm, this week’s US and UK GDP figures which are set to be released on Thursday and Friday respectively may be able to reveal a lot about the state of the world’s biggest economy and the United Kingdom’s economic growth. GDP, which is an abbreviation for Gross Domestic Product, is a measure of the total market value of goods and services produced in a country. This is a key economic indicator as it can be used as a gauge of economic growth or deterioration and can even create market volatility if the readings go against predictions. 

US Q4 GDP figures are expected to come in at 2.8% which is slightly below Q3’s 3.2%. As for the UK’s Q4 GDP data, the predictions seem to be that the data will reveal that the UK might have avoided a recession amidst inflationary pressures rising to almost 10% there. Whether or not these predictions will hold true is yet to be determined and the upcoming data can have a significant effect on the markets and on central banks’ monetary policies. Moreover, on Wednesday, Consumer Confidence Index (CCI) figures are also expected to be released in the US. This index, which is a survey-based measure, can provide an overview of consumers’ sentiments and how they view the economy. And, as such, can be a good indicator of the health of the US economy in the present and the near future. 

In addition to the aforementioned economic releases, this week, EU flash CPI figures are expected to be published on Friday, March 31st. Since CPI is a key measure of inflation and deflation, and since the EU had to grapple with a recent interest rate hike by the European Central Bank (ECB) on March 16th, the banking sector’s turmoil, and an energy crisis driven by the ongoing war between Russia and Ukraine, the upcoming CPI release can have a significant impact on the markets. Although headline inflation rates have dwindled to 8.5% compared to last year’s 9.2%, it seems that the ECB has hopped on the FOMC’s hawkish bandwagon recently and might continue to do so in the near future. Regardless, this CPI release can still play a key role in the upcoming ECB meetings, so traders may have to wait and see what the inflation data will look like this week. 

Other economic data reports this week that might interest traders and market participants include Australia’s monthly CPI on Wednesday, Japan’s CPI, US Core PCE, and Canada’s MoM GDP on Friday. 

Traders will have to see how these scheduled events can affect the markets, policymakers’ decisions, and the economy as a whole. In addition, it might be interesting to keep track of banking stocks’ trajectories by the end of this week to see if any substantial changes materialized.