Key Takeaways
  • Fed Chair Jay Powell will deliver his semi-annual testimony to Congress next week.
  • President Biden is expected to release his proposed budget for the 2024 fiscal year on Thursday, March 9.
  • The President's budget proposal will take on heightened importance in light of the debate over raising the debt ceiling.

Next week has several events in Washington that could impact markets.  Probably the most important is the semi-annual Congressional testimony by Fed Chair Jay Powell.  As Tom Lee said in his report this past week, Chair Powell has emphasized how rate decisions will be data driven and that is likely to be a key theme of his testimony next week.

Powell will appear before the Senate Banking Committee Tuesday morning, March 7, and the House Financial Services Committee on Wednesday, March 8.  I have given the Chair an A for telegraphing policy and not surprising markets; Congressional testimony is another opportunity to prepare markets for the next Federal Open Markets Committee (FOMC) meeting March 20/21.  All the signals to date have pointed towards a 25 bps move, and the hearings give Chair Powell the opportunity to continue to send a consistent signal as the next meeting approaches.

The other event for the coming week is the expected release of President Biden’s budget for Fiscal Year 2024 on Thursday, March 9.  The release of the President’s budget is always a big deal in DC, as it spells out the Administration’s priorities; this year it takes on added importance as the Biden Administration and Republican-controlled House face off on the debt ceiling.

President Biden and Speaker McCarthy have met once on the need to find a roadmap to raise the ceiling, but there haven’t been any follow-up meetings. The official publication of the President’s budget seems like the next step in finding a compromise on the debt ceiling legislation.  While the Administration has said they want a “clean” debt ceiling increase, a divided Congress makes that unlikely.  The budget the White House puts forward next week should become the starting point for serious talks on a budget/debt ceiling deal.

Disclosures (show)

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