The Five Key Points to Watch in the Markets This Week
 "5 Key Market Events This Week: Nvidia, Inflation & More")
1. Nvidia’s Earnings: Barometer of the Artificial Intelligence Market
• Investor Expectations
Analysts anticipate an adjusted earnings per share of $0.84, while revenue is expected to reach an impressive $38.26 billion, representing a spectacular increase of 73% compared to the previous year. Beyond the raw figures, management’s comments on the outlook and future demand will be scrutinized closely, as they could determine the trajectory of the technology market as a whole.
• The Impact of Chinese Competition (DeepSeek)
2. US PCE Inflation: Key Indicator for the Fed
Friday will mark the release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation indicator. This data is of paramount importance in the current monetary policy context.
• Importance of the PCE Index for Monetary Policy
Unlike the more publicized CPI, the PCE index is considered by the Fed to be the most reliable indicator for measuring inflation. It accounts for changes in consumer habits and offers a more comprehensive view of inflationary pressures, making it an essential tool for calibrating US monetary policy.
• Inflation Forecasts and Expectations
Economists predict that the annual “core” PCE index (excluding volatile food and energy prices) will be 2.6% in January, down from the previous 2.8%. On a monthly basis, an increase of 0.3% is anticipated. These figures, if confirmed, would indicate a gradual deceleration of inflation, while remaining above the Fed’s 2% target.
• Potential Fed Reaction
Lower-than-expected inflation data could strengthen expectations for a first interest rate cut in the coming months. Conversely, persistent inflation could prompt the Fed to maintain its restrictive policy longer than anticipated, which would have significant repercussions on bond and stock markets.
3. US Budget Process and Political Implications
The budget reconciliation process in the United States constitutes another major focus for markets this week, with potentially significant implications for the economy.
• Budget Reconciliation Issues
The reconciliation mechanism allows certain fiscal and budgetary measures to be adopted in the Senate with a simple majority rather than the usual 60 votes. This procedure is particularly important in the current political context, where Republicans are seeking to advance their budget priorities.
• Differences Between House and Senate Proposals
Significant divergences persist between the House and Senate approaches to the budget, particularly on immigration and tax reduction issues. These differences will need to be reconciled to arrive at a coherent budgetary framework, a process that could generate uncertainty in the markets.
• Potential Impact of Trump’s Policies
The economic policies proposed by the Trump administration, particularly regarding tariffs and tax cuts, constitute an additional factor of uncertainty. These measures could potentially fuel inflation while stimulating short-term growth, creating a complex environment for investors and policymakers.
4. Inflation in Europe: Signals for the European Central Bank
Europe will also have its inflation week with the publication of data in Germany and France, two crucial indicators for the ECB’s monetary policy.
• Publication of Data in Germany and France
Inflation figures in the two largest economies in the eurozone will provide valuable indications on the trajectory of prices in the region. This data, published at the end of the week, will help gauge the effectiveness of the restrictive measures implemented by the ECB.
• Outlook for ECB Monetary Policy
As the ECB contemplates a possible reduction in interest rates in the coming months, this inflation data will significantly influence its decision. Persistent inflation could delay monetary easing, while a more pronounced slowdown than expected could accelerate the timetable for rate cuts.
• Uncertainties Related to US Policies and the Geopolitical Situation
The potential impact of US tariffs on European exports, combined with geopolitical tensions related to Ukraine, creates an environment of uncertainty for the European economy. These external factors could complicate the ECB’s task in calibrating monetary policy.
5. Diplomacy and Ukraine: Meetings with Donald Trump
The geopolitical aspect will also be at the center of attention this week, with potential implications for financial markets.
• Meetings of Macron and Starmer with Trump
French President Emmanuel Macron and British Prime Minister Keir Starmer will separately meet with Donald Trump this week. These discussions, which will notably focus on the situation in Ukraine, could provide indications on the evolution of US foreign policy and its repercussions on Europe.
• Ukraine War Issues and Potential Negotiations
Discussions regarding a possible peace agreement in Ukraine will be particularly scrutinized. Any signal of a change in US support for Ukraine could have significant repercussions on European geopolitical stability and, by extension, on financial markets.
• Implications for Defense Spending in Europe
Given the uncertainties regarding the US commitment to NATO, an increase in defense spending in Europe seems likely. This budgetary reorientation could benefit the defense sector while creating additional pressure on European public finances.
This week therefore promises to be decisive for financial markets, with a conjunction of economic, political, and geopolitical events likely to influence trends in the long term. Investors will need to demonstrate agility to navigate this complex environment marked by uncertainty and volatility.
