A calm start to the first week of 2023

The first week of the new year 2023 started very calmly in the financial markets. Downright sleepy. However, this can only be the proverbial "calm before the storm", because the week can still provide a lot of emotions.

Monday, January 2 is a public holiday in many countries. Including really big economies like the US, China, Japan, UK, Canada, New Zealand and Switzerland. This means that there is really not much going on in the markets today. There is still a festive atmosphere. Especially that the industrial PMI indices from Europe published before noon did not cause much emotion.

Industrial PMIs published on January 2, 2023

Source: macroNEXT

However, this may be the "calm before the storm". The week promises to be really exciting. And not only because normal trading is back on the markets after the Christmas break (and laziness). First of all, because a weak 2022 in the markets has been separated by a group of dashes, and now a new game in the markets begins. The year 2023 begins.

It will also be an interesting week because a lot of macroeconomic data will be released, which may boost emotions in the markets. On the one hand, these will be preliminary readings of December's inflation in the largest European economies. On Tuesday, investors will check whether CPI inflation in Germany fell to 9% in December, as forecast. with 10 percent Y/Y in November. On Wednesday, similar data will be released from France, on Thursday from Italy, and on Friday we will get data for the entire euro zone. These reports will be an important point of reference for expectations regarding the further path of rate hikes interest rates by the European Central Bank.

Inflation, interest rates, labor market

Inflation reports will come not only from the aforementioned economies, but also from, among others, from Switzerland and Poland. In the latter case, inflation is expected to slow down to 17,3% in December. from 17,5 percent in November. This decline would certainly have been greater and could even have brought inflation to around 16 percent, if not for the state-owned PKN Orlen in December, which did not inflate fuel prices.

The second group of macroeconomic reports that may shake the markets this week will be data from the US labor market. Data directly related to future decisions Federal Reserve (Fed) on interest rates. It will be published on Thursday ADP report on employment in the private sector in December (forecast: 145), and a day later the monthly report from the labor market, i.e. data on employment in the non-agricultural sector (forecast: 200), unemployment rate (forecast: 3,7 percent, ) and hourly wages (forecast: 5% y/y).

Another important reference to the US monetary policy will be Wednesday's publication of minutes from the last meeting FOMC. Other reports from the US released this week, of which there will be a lot, will have less impact on market sentiment.