Today the economic calendar is heavily loaded with events worth paying attention to.
First and foremost, investors are most excited about the Federal Reserve monetary policy meeting which ends today. The Fed will have a chance to adjust the interest rate if it deems it’s appropriate, but that will probably not happen until the second half of 2022.
More importantly, the Federal Reserve will release its timeline for ending its massive bond-buying program, thereby withdrawing stimulus from the economy of the United States. The Fed will also publish some expectations about the possibility of future rate hikes, an aspect of monetary policy that the markets are especially curious about.
US stock indices today will trade in a subdued manner until the results of the Fed meeting are out. If the Federal Reserve does show signs of tightening monetary policy soon, stock indices will likely drop.
Inflation is another keyword for the markets today. The United Kingdom shared its inflation and core inflation rates for November earlier in the day, with all of the reports exceeding the forecasts.
This complicates the situation for the Bank of England somewhat. The regulator previously showed that it wants to see how Omicron spreads and whether it results in more lockdowns, hurting the economy. Then it would consider whether to hike interest rates. But with inflation moving higher than expected, the Bank of England might have to think about interest rates even while Omicron rages about.
In the eurozone, France delivered an inflation rate report that matched the forecast of 2.8%, while Italy narrowly missed the predicted amount, disappointing investors.
Like France, Canada’s own inflation rate data met the forecasts perfectly.
Aside from all of the Federal Reserve meeting news, the United States also published its retail sales data for November, a month that has historically been good for shopping due to Thanksgiving, Black Friday, and Cyber Monday, officially the first days of the holiday shopping season.
However, this month’s retail sales data was quite poor, well below the forecasts, showing the great impact the pandemic has had on people’s shopping habits.
Meanwhile, China published yet more disappointing data about the growth of its economy. The deeply troubled real estate development sector continues to sour sentiment. Plus, the fact that China just confirmed its first case of the Omicron variant means that the country, or parts of it, might be heading into another lockdown soon, which will certainly slow down its economy further.
