By Noreen Burke
Investing.com – Investors will be watching the release of the minutes of Wednesday’s Federal Reserve meeting for new clues about the impact of rising inflation on the future course of interest rates. Markets are also awaiting President Joe Biden’s announcement of the appointment of the head of the US central bank, and the decision will be known possibly before the Thanksgiving holiday this Thursday.
A day earlier, on Wednesday, a large amount of US economic data will be released, while PMI data for the Eurozone, UK and US will revolve around the impact of supply chain problems. and inflation in business activity. On the other hand, Black Friday marks the beginning of the key Christmas shopping period, in a context of concerns that consumers will tighten their belts.
This is what you need to know to start the week.
1. The Fed minutes
On Wednesday, the Fed is to release its November meeting, at which policymakers decided the US economy was strong enough to begin reducing its pandemic-era asset purchase program, since underway to bolster recovery.
Since then, the economic recovery has continued to accelerate, with jobs rising and inflation continuing to skyrocket, prompting Fed Vice President Richard Clarida last week to call for a debate on a faster cut for the Fed. can raise the rates sooner.
Last Thursday, Chicago Federal Reserve Chairman Charles Evans, known for his cautious stance on monetary policy, said he is “more open” to raising interest rates next year than six years ago. months. On the other hand, the president of the Federal Reserve of Atlanta, Raphael Bostic, has been in favor of a rate hike in mid-2022.
The Federal Reserve will release its new quarterly forecasts after its next meeting in mid-December, and these could provide a clearer reading of how far policy makers have changed their minds.
2. Biden’s election to the Fed chair
The White House said last week that President Joe Biden will likely decide before Thanksgiving whether to keep current Federal Reserve Chairman Jerome Powell for yet another term or to promote current Federal Reserve Governor Lael. Brainard.
Analysts expect some volatility in the stock markets around this announcement, especially if Brainard is chosen.
Powell, whose term ends in February next year, was appointed in 2018 by then-President Donald Trump. Brainard, who has been on the Fed’s board since 2014, is a favorite of progressive Democrats and considers himself more cautious than Powell.
If Brainard is finally named, markets could revise the timing of future rate hikes, while the prospect of lower interest rates for longer could lead to a US Treasury sale fueled by expectations of higher rates. inflation.
3. United States data
The United States will release a series of economic data on Wednesday, before markets close for the holiday on Thursday. The highlight will be the personal income and expense figures, which include the underlying PCE price index, which is rumored to be the Fed’s favorite inflation gauge.
The economic calendar also includes a review of third-quarter GDP data, initial claims for unemployment benefits, durable goods orders, new home sales and consumer confidence.
New home sales reports and November PMI data will be released on Monday and Tuesday, which are expected to show only modest improvement.
While all indications are that the data for November from the United States will indicate a modest rebound in business activity, similar surveys are expected to show a slowdown in activity in the manufacturing and services sectors.
Rising infections are prompting new restrictions in parts of Europe, while rising gasoline prices are fueling inflation, exacerbated by the global supply chain crisis.
The European Central Bank is under increasing pressure to tighten its ultra-relaxed monetary policy in order to counteract the impact on household purchasing power, but ECB President Christine Lagarde has objected, arguing that tightening monetary policy now it could stifle the economic recovery.
Meanwhile, the Bank of England appears set to become the first of the world’s major central banks to raise interest rates since the start of the pandemic, and investors and economists expect a rate hike at their next meeting on 16 from December.
5. Black Friday
The Christmas shopping season gets off to a strong start this Friday, in a context of skyrocketing inflation and supply shortages.
There has been some concern that skyrocketing inflation could affect consumer spending, but rising retail sales figures for October indicate that Americans started shopping earlier to avoid supply shortages. Good third-quarter results in the retail sector have also added to the positive signs for Christmas shopping.
“In third-quarter results, one of the trends we have seen is the resounding strength of the American consumer,” Jessica Bemer, a portfolio manager at Easterly Investment Partners told Reuters on Friday.
“We’ve heard it all this week from retailers talking about the consumer coming back to the stores, enjoying the shopping experience and getting ready for the holidays. It makes sense, but it really shows during display season. of results ”.