What to expect in March

What are the major events to watch out for in March

Financial markets remain focused on the issues of inflation and interest rates, which have been the driving force behind moves over the past year.

Over the last four weeks a string of stronger data points has simultaneously allayed worries about a global recession while igniting worries about a higher terminal level of interest rates. As we look into February, here are the key events to monitor:

Non-farm payrolls (10 March): last month’s number saw the US economy produce 517,000 new jobs, way ahead of forecasts. This month a more modest 206,000 is forecast, but investors will be on the lookout for both a beat on this number and revisions (particularly downward ones) to last month’s number.

The US unemployment rate is expected to hold at 3.4%, while monthly wage growth is forecast to be 0.3%, both in line with last month’s numbers.

Markets to watch: US indices and the dollar specifically, but a big number either side of expectations, particularly on wages, could spark volatility across the globe.

US CPI (14 March): US inflation figures have been the event for markets over the last year, as concerns about surging inflation have caused significant volatility across assets. Last month a rebound in inflation raised concerns that the Fed would have to hike rates at a sharper pace than previously expected.

Given that last month saw both headline and core CPI rise sharply, investors will be on watch for signs that this rise has continued for a second month.

Markets to watch: this is likely to be a reading whose ramifications will be felt across all assets, but the dollar will be the prime spot for initial volatility that will then echo across a host of other markets.

UK budget (15 March): the UK chancellor, Jeremy Hunt, unveils his latest financial plans to Parliament. After the emergency budget and the emergency response of autumn last year, a more positive view has emerged on UK government finances and the outlook for the year, and even with an extension of the energy price guarantee Mr Hunt may have some room to bestow largesse on taxpayers or some departments.

Markets to watch: the pound and crosses like EUR/GBP will be key here; a rosier forecast on the UK economy could give sterling a much-needed lift.

ECB meeting (16 March): rates are expected to rise to 3.5% for the eurozone, as the ECB continues its fight against eurozone inflation. The fall in energy prices has helped to restore a measure of confidence in the outlook for the eurozone, so Christine Lagarde may be tempted to sound a bit more optimistic too.

Markets to watch: the euro and eurozone indices will be the focus for any volatility, but we might find that this is one eurozone event whose impact is felt much further afield than just Europe.

UK CPI (22 March) and Bank of England meeting (23 March): it promises to be a busy 24 hours for UK traders. UK inflation is expected to slow down this month, to 9.6% from February’s double-digit figure of 10.1%. Meanwhile, the BoE is expected to raise rates by 25bps, but recent cautious commentary from governor Andrew Davies and a potential weaker inflation update may mean that the UK central bank is able to put its hiking efforts on pause beyond this meeting.

Markets to watch: EUR/GBP and GBP/USD, with the potential for some weakness in sterling to result if markets begin to expect the BoE to halt its hiking policy for the time being.

FOMC decision (22 March): the final big event to watch out for, the Fed is forecast to raise rates by 25bps, as it did at its last meeting. Recent strong data will likely be a source of comment, particularly if it pushes the Fed towards a more hawkish stance.

Markets to watch: the dollar, with markets keenly watching this decision for any sign that the Fed is preparing to pause its policy of steady rate rises. Over the past month markets have pushed back their expectations on the first rate cut into 2024, and this meeting will be key for deciding whether that view needs to change.