What to Expect in the Markets This Week

Key Takeaways

  • The Fed, Bank of England, and Bank of Japan all announce monetary policy decisions.
  • The U.S., China, Japan, and the EU release industrial production numbers.
  • The U.S., U.K., and Canada all release retail sales numbers this week.
  • Quadruple witching on Friday

U.S. equity markets are coming off of another week of losses led by tech stocks that have lost their momentum. Apple, Facebook, Alphabet, and Amazon all fell 5% or more last week as sentiment has shifted away from 2020's winners. The hopes for more fiscal economic stimulus looks increasingly grim as the Senate failed to pass another bill, while the Lost Wages Assistance (LWA) emergency unemployment benefits have already started to run out of money in some states.

This upcoming week, several central banks, including the U.S. Federal Reserve have policy meetings. We'll also see how both the industrial production and retail sectors of the economy performed last month.

But first, here's a look at major asset classes' returns year-to-date:

Events This Week

Monday, Sept. 14:

  • Chinese Industrial Production (August)
  • Chinese Unemployment
  • Indian Consumer Price Index (CPI) (August)
  • Eurozone Industrial Production (July)
  • Japanese Industrial Production (July)
  • Japanese Liberal Democratic Party Elects a New Party Leader

Tuesday, Sept. 15:

  • U.K. Average Earnings Index (July)
  • U.K. Unemployment Claimant Count Change (August)
  • German ZEW Economic Sentiment Index (Sept.)
  • Eurozone ZEW Economic Sentiment Index (Sept.)
  • U.S. Industrial Production (August)

Wednesday, Sept. 16:

  • U.S. Retail Sales (August)
  • U.S. Federal Reserve Interest Rate Decision and Federal Open Markets Committee Statement (FOMC)
  • Bank of Japan Interest Rate Decision
  • Japanese Parliament Votes to Install a New Prime Minister

Thursday, Sept. 17:

  • Bank of Japan Monetary Policy Statement and Press Conference.
  • Eurozone Consumer Price Index (August)
  • Bank of England Interest Rate Decision (September)
  • U.S. Building Permits (August)
  • Philadelphia Fed Manufacturing Index (September)

 Friday, Sept. 18:

  • U.K. Retail Sales (August)
  • Canadian Retail Sales (August)
  • Preliminary Michigan Consumer Expectation and Sentiment (September)
  • Quadruple Witching Options Expiration Occurs

Central Banks Roundup

As much of the world worries about a "second wave" of COVID-19 infections slowing the economic recovery, we'll hear what three of the largest central banks are thinking this week. On Wednesday, both the U.S. Federal Reserve and the Bank of Japan announce interest rates, and the Fed also gives its press conference. On Thursday, the Bank of Japan gives its press conference while the Bank of England gives its own interest rate decision and press conference. Significant current events are facing all nations.

This is the last scheduled Federal Open Market Committee (FOMC) meeting before the U.S. presidential election on Nov. 3, the next one is scheduled to take place just after the election, so this will be the last time the Fed will be expect to weigh in on the economy before Americans go to the polls.

In the U.K., this is the last Bank of England Monetary Policy Committee meeting before the Oct. 15 EU summit, which U.K. Prime Minister Boris Johnson says the U.K.-EU trade deal must be done by if the U.K. and EU will have their new relationship worked out by the end of the transition period on Dec. 31, 2020.

For Japan, this comes right as long-serving Japanese Prime Minister Shinzo Abe stepped down due to health reasons, and his party, the Liberal Democratic Party, will be choosing a new party leader, with the Japanese parliament voting on a new prime minister on the same day the central bank announces its new monetary policy.

Industrial Production

China, Japan, the Eurozone, and the United States all announce industrial production in the upcoming week. Note that China and the U.S. will be announcing August numbers, while Japan and the Eurozone will be announcing July numbers, so don't go comparing apples to oranges. That said, this key indicator can help show the pace of the global recovery.

Retail Sales

An even more important indicator than industrial production here in the U.S. is retail sales. The U.S., U.K., and Canada all report retail sales this upcoming week. After COVID-19 infections flared again during the summer, many U.S. states reversed their openings and the speed of retail sales growth dropped to 1.2% in July, so this month may indicate how people are acting in aggregate. In the U.K., the Conservative government has been pushing hard for people to "Eat Out to Help Out," offering people discounts at restaurants to try and save that struggling industry. We'll see if that program, implemented at the beginning of August, has done anything to spur additional spending in that part of the retail sector.

Quadruple Witching

On Friday, brace for quadruple witching. That's a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. While stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September, and December. The options market has been warning of volatility ahead, and quadruple witching typically brings that out.

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