Episode summary
Daybreak Weekend: Fed Meeting, Europe Central Bank Decisions, Takaichi-Trump Meeting | Bloomberg...
Bloomberg Daybreak: US Edition
· · 39 min · Hosts: Nathan Hager
Summary
Markets are headed into a week shaped by three crosscurrents: the Federal Reserve’s March meeting, renewed inflation pressure from higher energy prices, and a diplomatic test for Japan’s new prime minister as she meets President Donald Trump in Washington. The Fed is expected to hold rates, but Bloomberg Economics’ view on the program was that oil near $80 could push headline PCE up toward 3ish while also squeezing core spending and eventually weakening the labor market.
The week’s earnings calendar is led by FedEx, Macy’s and Lululemon. FedEx has benefited from investor support for cost cuts, margin improvement and its freight spinoff plans, while Macy’s faces a tougher consumer backdrop and scrutiny of its turnaround. Lululemon enters with heavy pressure from activist involvement, leadership changes and nearly 70% declines since the start of 2024, even as tariff risks have eased somewhat.
In Europe, the Bank of England and the European Central Bank are both dealing with the fallout from higher oil and gas prices tied to Middle East conflict. The discussion argued that the ECB may be done with rate cuts and could even face rate-hike questions, while the Bank of England is more likely to stay on hold for now. In Asia, Japan’s leaders are focused on energy security, inflation and defense spending ahead of Takahichi’s White House meeting.
Key takeaways
- The Fed is expected to hold rates on Wednesday, but Bloomberg Economics said higher oil could lift headline PCE toward 3ish and still leave room for cuts later this year.
- Anna Wong argued that an oil shock is a contractionary income shock, so it can raise headline inflation while lowering core PCE.
- FedEx goes into Thursday’s report with strong investor momentum after raising its full-year outlook and gaining on plans to cut costs and spin off freight.
- Macy’s faces a weaker setup, with sales projected around $7.5 billion and investors focused on its turnaround and Bloomingdale’s strength.
- The ECB may be forced to reconsider cuts, while the Bank of England is more likely to hold rates and wait for more data.
- Japan’s Prime Minister Sanae Takaichi is using the White House meeting to reinforce energy security, defense spending and the U.S. alliance.
Notable quotes
“A hike is not in my baseline. We are still expecting multiple rate cuts”
“FedEx has eclipsed their rival UPS and it has become the largest US parcel carrier by market value for the first time”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we look to the next policy decision from the Fed. I'm Nathan Hager in Washington.
I'm Caroline Hepk in London, where we discuss how Europe's inflation battle may not be over just yet. I'm Doug Krnner looking ahead to the meeting between President Trump and Japanese Prime Minister Sona At Takahuchi.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 991 Washington DC, Bloomberg 929 Boston, DAB Digital Radio London, SiriusXM121 and around the world on Bloombergradio.com and the Bloomberg Business App. Good day to you. I'm Nathan Hager.
We begin today's program with the Federal Reserve. The central bank begins its March policy meeting on Tuesday and issues its decision on interest rates Wednesday. For more on what to expect, we're joined by Anna Wong, chief US economist for Bloomberg Economics.
And um Anna, just looking at expectations in the market. Seems like investors are thinking a whole lot of nothing. But um what are you expecting under the surface?
Um I'm expecting the the Fed to sharply revise up the PCE inflation forecast. So in the uh December SP it was in in the mid2s. I think that given where oil price is right now and it looks like it's quite likely oil price will stay elevated at around $80 at least on average for the rest of this year and that would mean that headline PCE should be going all the way up to threeish.
So that would be a quite a sharp upward revision.
And is that the kind of revision that would cause you to revise upward your expectations for interest rates?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed meeting
- central bank decisions
- bank of england
- european central bank
- takaichi-trump meeting
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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