Wall Street Focuses on February CPI... Closely Monitoring Potential Stagflation [New York Stock Market Weekly Outlook]

Amid Growing Stagflation Concerns

Market Shock Expected if February CPI Comes in Higher Than Anticipated

Chairman Powell Still Positively Evaluates the Economy

This week (10-14), the New York stock market is expected to be driven by the February Consumer Price Index (CPI) to be released on the 12th. With growing concerns about stagflation in the US, if the CPI growth rate comes in higher than expected, the New York stock market will inevitably take a hit. The market forecast for February's CPI growth rate is 2.9% (year-over-year). This is a slowdown from January's 3%. This CPI release is particularly significant as it's the last one before the Federal Open Market Committee (FOMC) meeting on March 18-19.

However, Federal Reserve Chairman Jerome Powell's positive comments about the US economy have somewhat reassured the market. In a speech at a monetary policy forum in New York on the 7th (local time), Powell noted, "We will have to see how the economic indicators affect future consumption and investment," adding that "sentiment indicators have not been good leading indicators for consumption growth in recent years." This was in reference to recent consumer sentiment indices suggesting a slowdown in consumption. He also positively assessed the labor market, stating, "Many indicators show that the labor market is robust and broadly balanced."

Regarding the February non-farm employment data released that morning, he judged that "removing monthly volatility, US employers have steadily added an average of 191,000 jobs per month since last September."

The January Job Openings and Labor Turnover Survey (JOLTs) report, coming out on the 11th, is expected to provide hints about the labor market situation through job openings and voluntary quit rate indicators. On the 13th, the February Producer Price Index (PPI) will be released, with market expectations of a 0.3% increase compared to the previous month.

On the final trading day, the 14th, the University of Michigan Consumer Sentiment Index preliminary reading for March will be released. It's worth noting that in February's preliminary reading, the 1-year inflation expectation that exceeded forecasts triggered a sell-off in the New York stock market.

New York=Park Shin-young, Correspondent nyusos@hankyung.com