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Intesa Sanpaolo : FOMC: seeing is believing

Intesa Sanpaolo : The Fed expects a clear improvement of the outlook for growth, prices, and employment, but will delay any changes in policy until the achievement of “actual progress, not forecast progress”.

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Weekly Economic Monitor – 19. March 2021

Intesa Sanpaolo – Research Department


We must now wait and see if the market will also adopt a similarly “sceptical” view on the Fed’s forecasts, or if it will believe in the central bank’s conversion to a monetary policy that is no longer pre-emptive, but exclusively reactive.

The week’s market movers

In the Eurozone , this week will bring the indications of March confidence surveys. The composite PMI, that measures the change in activity compared to the previous month, could outline to new contraction of euro area GDP. The advance estimate of the European Commission’s consumer confidence index should also highlight deteriorating sentiment. Vice versa, the national surveys should send mixed signals (the German IFO index is forecast to improve, the French INSEE index to remain stable, whereas consumer and businesses confidence in Italy should worsen). The second readings of 4Q GDP growth in Spain and the Netherlands should confirm the advance estimates.

This week, several data releases are lined up in the United States , although none will be particularly relevant in shedding light on trends over the coming quarters. Markit flash PMIs should improve further in March, with both the manufacturing and services indices in markedly expansionary territory. Consumer confidence is also expected to improve further in March, thanks to the new fiscal stimulus package. February data releases will include personal spending, expected little changed overall, with utilities making a strong positive contribution in the services sector, as opposed to a contraction of spending on goods. Personal income and the saving rate are forecast to correct, after surging in January. Both consumption deflators (headline and core) should show more moderate changes compared to the previous months. New and existing home sales should be down in February, due to adverse weather conditions and to higher mortgage rates.


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