Spotting key events and indicators to stay ahead of the curve as an investor | The Financial Express

Spotting key events and indicators to stay ahead of the curve as an investor

Over the next few months, investors will be closely monitoring some of these crucial indicators and events.

US Fed rate hike, powell speech, inflation, US CPI, stock market
A 25 basis point rate hike may be already priced-in but Powell's speech is the key.

Investors in the US stock market are closely monitoring recent events that may offer them convincing signals about the direction of stock values in the future. Investors will continue to closely monitor the US and European recessions as well as big companies’ December quarter corporate profits in the top industries. However, more than the earnings as against the estimates, it will be the management outlook that will be closely watched. Still, there are a few other key indicators and events that investors globally will be glued to over the next few months.

US Fed Rate Hike

Most economists and market experts are of the view that the U.S. Federal Reserve will complete its tightening cycle after a 25-basis-point raise at each of its upcoming two policy meetings, with the first one anticipated on January 31 – February 1, 2023. Following its meeting on December 13–14, the Federal Reserve declared that it will increase interest rates by 0.50 percentage points, bringing the federal funds rate to its desired range of 4.25–4.5%. The probability that the US central bank will increase rates by 25 basis points on February 1, is currently over 98%, according to the money markets.

A hike in US Fed rates results in higher borrowing costs. An increase in borrowing costs may have an impact on both the equities and bond markets and there is always a possibility of lower returns from stocks and more risks from bonds. No wonder, both stocks and bond prices plunged in 2022 leaving the popular 60/40 portfolio in deep red last year. A rate increase also results in a stronger US dollar, which might lower the earnings of businesses with significant overseas sales.

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Fed Chief Powell’s Speech

Federal Reserve Chair Jerome Powell’s speech and remarks at the post-FOMC conference are keenly watched by investors. In these situations, what the Fed members are thinking about the economy and interest rates is revealed. Powell’s speech also sends messages to the market participants and helps in deciding future action. An important milestone in Powell’s speech was the warning Federal Reserve Chair Jerome Powell gave to households and businesses during his Jackson Hole Economic Policy Symposium August 2022 speech. Markets were expecting a Fed Pivot but later on, tanked. In his Jackson Hole speech, Powell stated that the Fed would maintain raising interest rates to lower inflation.

US 10-Year Treasury Yield

As concerns about a severe economic slowdown and the possibility of a less aggressive Federal Reserve increased, the yield on the US 10-year Treasury note—often used as a proxy for global borrowing costs will be keenly tracked by investors. If US corporate activity keeps declining, worries will escalate that the economy may be headed toward a recession.

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Will there be a recession in the US and how financially damaging will it be to the economy, individuals and corporates? This is something investors are concerned about and only time will tell whether it will be a hard or soft landing of a recession on the economy. If a recession comes, how will the markets react is also an important thing to watch.


US Fed rate hikes imapcts the bottomline of companies. It is anticipated that in early 2023, there will be the beginning of a US earnings recession, which will run until the second half of 2023. The impact on earnings will be there as expenses are still rising, borrowing rates are starting to bite, and consumer spending is dropping.

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First published on: 26-01-2023 at 18:27 IST