| By Noreen Burke, Investing.com |
Capital market investors are expected to focus on the minutes of the Federal Reserve meeting this coming Wednesday, in anticipation of new insights into the impact of rising inflation on the future path of interest rates.
Markets are also awaiting an announcement from U.S. President Joe Biden on who has chosen to head the central bank, and the decision is expected to be made before Thanksgiving, which falls on Thursday.
A plethora of U.S. economic data is expected ahead of the holiday on Wednesday, and data from purchasing managers’ indices from the eurozone, the UK and the US, released during the week, will illustrate the impact of supply chain and inflation problems on business activity.
Black Friday opens the main shopping season in honor of the holidays, amid fears of tightening belts among consumers.
Here’s what you need to know to start the week.
1. Federal Reserve Protocol
On Wednesday, the Federal Reserve will release its November minutes of the meeting, in which policymakers decided that the U.S. economy was strong enough to begin reducing the plague-buying assets plan to encourage recovery.
Since then, economic recovery has continued to accelerate, rising jobs are rising, and inflation continues to soar – prompting Richard Clarida, vice president of the Federal Reserve, to call last week to discuss a faster reduction, to prepare the Federal Reserve for an earlier rise. Of interest rates.
Last Thursday, Charles Evans, president of the Chicago Federal Reserve, whose positions are considered ionic, said he was “more open” to raising interest rates next year than he was six months ago. Atlanta’s Federal Reserve President Rafael Bostick has separately signaled his support for raising interest rates by mid-2022.
The Federal Reserve is expected to publish its most recent quarters after its next meeting, in mid-December, and forecasts may clarify how much policymakers’ views have changed.
2. Biden’s election to lead the Federal Reserve
Last week, the White House announced that President Joe Biden would decide, probably before Thanksgiving, whether to keep incumbent Federal Reserve Chairman Jerome Powell for another term in office, or whether to promote the current Federal Reserve Governor, Lyle, to that position. Brainard.
Analysts predict some volatility in the stock market regarding the announcement, especially if Brainard is elected.
Powell, whose term is due to end in February next year, was appointed in 2018 by then-President Donald Trump. Brainard, who has served on the Federal Reserve Council since 2014, is the preferred choice of progressive members of the Democratic Party, and is considered more Ionic than Powell.
If Brainard takes a role, markets may re-embody the timing of future interest rate hikes, while longer-term interest rates may lead to a surge in U.S. Treasury bond sales, due to expectations of rising inflation.
Plenty of data from the US
The U.S. is expected to release a series of economic data on Wednesday, before closing markets for the holiday on Thursday.
The economic events log also includes revised data for the third quarter,,, and.
Reports on sales of existing homes and data from the Purchasing Managers’ Index (PMI) for November, which are expected to show only a slight improvement, will be published on Monday and Tuesday, respectively.
4. Purchasing Managers’ Indices
Data from the Purchasing Managers’ Index for November from the US are expected to reflect only a slight increase in business activity, but similar surveys from the Eurozone and the UK are expected to reflect a slowdown in activity in the manufacturing and services sectors.
The increase in the number of infections in Corona is leading to the renewal of restrictions in some parts of Europe, and the surge in petrol prices is fueling inflation, and the shortage of the global supply chain is also contributing to this.
The European Central Bank is under increasing pressure to tighten a particularly generous one, to offset the impact on household spending power, but Christine Lagard, president of the European Central Bank, disagreed, arguing that tightening policies could now hold back economic recovery.
The Bank of England is expected to be the first major central bank in the world to raise rates since the outbreak of the plague, and investors and economists anticipate raising interest rates at a future meeting scheduled for December 16.
5. Black Friday
The holiday shopping season will be in full swing on Friday, amid the spike in inflation and supply shortages.
There are some concerns about the possibility that high inflation will hurt consumer spending, but from the jump in retail sales numbers for October it can be understood that Americans started buying early, to overcome supply shortages. The strong financial statements of retail companies for the third quarter also added to the positive signs in terms of holiday shopping.
“From the financial statements for the third quarter, one of the trends we noticed is the clear strength of the US consumer,”
As Jessica Bitter, portfolio manager at Easterly Investment Partners, told Reuters on Friday.
“We heard it all week, from retail companies talking about consumers returning to the store, enjoying the shopping experience and getting ready for the holidays. It makes sense, but it really gets verified in the financial reporting season.”
Reuters contributed to this report