US stocks rallied as optimism grew for the end of the Fed’s rate hiking campaign. It appears that traders expect to see two or three more quarter point rate rises, which is good news in the interest of risky assets. This is likely the most important week of the year as we will find out the short-term trajectory for both the world’s two largest economies. China’s conservative growth target of around 5% was disappointing as it implies we won’t be getting any aggressive stimulus as the economy bounces back with its COVID reopening.
This week will likely deliver a make-or-break moment for risk appetite as we will hear Fed Chair Powell’s testimony to Congress and find out if the hot January jobs report was an aberration. Stocks probably won’t be able to have a meaningful rally until we hear from Fed Chair Powell.
Crude prices turned positive on optimism that the Fed won’t be triggering a hard landing. Earlier, oil was heavier on disappointment after China’s National People’s Congress delivered a slightly disappointing 2023 GDP growth target of 5.0%. Oil dropped overnight because many energy traders expected a growth target closer than 6%.
Geopolitical risk also remains…