Top 5 things to watch in the markets in the coming week

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By Noreen Burke

Investing.com — The minutes of Wednesday’s Federal Reserve meeting will be the main highlight of a short holiday week, with investors looking for any indication that the pace of rate hikes may slow. The most important shopping period of the year kicks off Friday in what will be an important test for US retailers. The OECD’s latest global economic forecast on Tuesday, along with global PMI data, will provide important insight into the health of the global economy. Meanwhile, China could step up economic support measures and there are signs that the king dollar is about to lose its crown. Here’s what you need to know to start your week.

  1. Fed minutes

The Fed will release the results of its November meeting on Wednesday, with investors eager for any sign that policymakers might consider slowing the tightening process after raising rates this year faster than at any time since the 1980s.

Fed Chair Jerome Powell and other policymakers have signaled that the central bank could shift to

smaller rate increases

next month to prevent them from tightening more than necessary and plunging the economy into recession.

At the same time, Powell has said rates may eventually need to go higher than the 4.6% that policymakers in September thought they would need next year.

The economic calendar for the coming week also includes the , , for October and data for November.

  1. Black Friday

Against a backdrop of rapidly rising inflation and rising interest rates, a major test of consumer demand takes place on November 25, when retailers launch ‘Black Friday’ sales – traditionally one of the strongest shopping days of the year.

Recent data showed that US retail sales rose more than expected in October, suggesting that consumers are on more solid footing heading into the year-end. Consumer spending accounts for more than two-thirds of US economic activity.

Retailers have presented mixed results in the most recent earnings season. Last week, Walmart (NYSE:) raised its full-year sales and earnings forecast as grocery demand is expected to continue despite higher prices, while Target (NYSE:) predicted a surprise drop in holiday quarter sales after warnings of “dramatic changes” in consumer behavior hurting demand.

Amazon (NASDAQ:), the world’s largest online retailer, said on Oct. 27 it was preparing for slower growth because “people’s budgets are tight” due to inflation.

  1. OECD Forecasts/PMI data

The OECD will release its latest forecasts for the global economy on Tuesday and this, together with preliminary measurements of business activity in November from a number of countries, will provide a snapshot of the health of the global economy.

The most recent OECD forecasts, made in September, already pointed to a worsening outlook for next year, with the US economy expected to slide into recession.

PMI data from the United States, the United States and the US on Wednesday may add to the gloom. In most European countries, PMIs are below the 50 mark that separates growth from contraction.

Britain is already facing a prolonged recession. Economic growth in the eurozone is holding up better than expected and labor markets remain relatively robust. But recession risks still loom amid energy shortages and high inflation.

  1. Dollar past the peak?

It peaked at a 20-year high of 114.78 in September and has been falling ever since. With the coin on track to post its biggest quarterly loss since the second quarter of 2017, investors are now wondering if it has passed the peak.

The rise in the dollar has been a dominant trading theme of 2022, thanks to the Fed’s rapid rate hikes, giving the currency an edge over its peers among investors.

But analysts of Goldman Sachs said Friday that a dollar top still appears “several quarters away,” noting it doesn’t expect the Fed to begin easing until 2024. It added that US growth is not expected to bottom out anytime soon.

  1. China

The People’s Bank of China’s commitment to stepping up supportive policy measures should be shown on Monday, when key lending rates are set.

The People’s Bank of China is expected to leave key lending rates unchanged for a third consecutive month, with policymakers reluctant to cut rates further by easing monetary conditions further.

Authorities are looking for ways to support economic growth without causing financial instability.

Other regional central banks also hold policy meetings during the week. It is expected to deliver a massive 75 basis point gain on Wednesday as the Bank of Korea tightens again, but possibly only by a quarter point.

–Reuters contributed to this report



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