Week ahead: monetary policy, supply crisis, jobs on the horizon as stocks continue to rise

  • Fed expected to cut bond program, BoE members call for rate hikes
  • Investors push stocks to record highs Friday, despite risks, disappointing earnings

At the start of November, the Federal Reserve remains a key driver of the global “dance” and stock markets. The US central bank hopes investors won’t overreact over the coming week, which could be both a dramatic and crucial turning point for the economy and financial markets.

After nearly two years of aggressively supporting the market as COVID-19 escalates globally, putting pressure on assets, policymakers are now changing course and adopting a more neutral posture. The Federal Reserve meets Tuesday and Wednesday, with the outcome perhaps the most important event for the markets over the coming week.

Inflation is no longer seen as transitory, but tightens along the way

Expectations are high for a policy reversal after Fed Chairman Jerome Powell finally admitted his frustration with continued rising inflation after insisting for months that escalating costs were “Transient”. , the Fed’s measure of inflation, because it excludes volatile food and energy prices, jumped 3.6% in September for the fourth consecutive month.

Speculation now is that the Fed will finally declare its intention to start scaling back its $ 120 billion-per-month bond buying program with which the central bank has kept the US economy heavily lubricated. Other global central banks will also meet this week, including that of Norway which is expected to rise again in December, and the.

The meetings Thursday. The BoE appears to be one of the world’s central banks leading policy on the path to normalization. External member Michael Saunders and Governor Andrew Bailey are strongly in favor of raising rates to quell inflation which seems to be spiraling out of control.

Nonetheless, before the weekend, the dollar fell 0.75% as Treasuries rose.

Cable exited its short-term bullish channel amid a rise in the dollar, wiping out two weeks of gains as it resumed along its bearish channel from the June peak.

The Fed’s initial view on the temporary nature of price spikes was rooted in the matrix conditions of supply and demand. As the central bank originally saw, supplies were only insufficient due to a technical issue – the bottleneck of goods at distribution points in the aftermath of the pandemic, possibly the worst disruption since WWII. Once the movement of goods clears up, the Fed argued, prices would fall back. But so far that has not happened.

The global chip shortage could also be a significant market catalyst this week. A number of semiconductor companies including Rambus (NASDAQ :), ON Semiconductor (NASDAQ 🙂 and NXP (NASDAQ 🙂 are reporting on Monday and each will likely provide additional information on the ongoing supply crisis and how long it will last. possible.

Notwithstanding the presumption that fiscal stimulus will eventually be cut, along with disappointing results from (NASDAQ 🙂 and (NASDAQ 🙂 companies on Thursday, US stocks rose on Friday with three of the top four indexes – the, and – all closing at new records. In addition, the S&P gained 6.9% in October, its largest monthly increase since last November.

Investors increased their stocks due to rising earnings, regardless of the myriad of additional risks. However, it now seems that even a failure by reputable mega-cap names cannot hamper investor exuberance, damn the fundamental justifications. We see this kind of behavior as an important red flag.

Yet, whether the escalation is warranted or not, the S&P 500 Index has exploded an evening star, as well.

The rise for the week with Treasuries including the benchmark.

Weekly Dollar

The greenback bounced off the bottom of the bullish channel that meets the neckline of a massive double bottom.

continued to struggle below the $ 1,800 level.

Weekly Gold

The precious metal’s short-term uptrend continues to find resistance against H & S’s long-term weekly continuation pattern.

continued to trade.

4-hour BTC / USD chart

However, on the 4 hour chart the cryptocurrency may develop an H&S bottom.

won Friday for the second day.

WTI Daily

Nonetheless, on the 4-hour chart, it appears to be forming an H&S low.

At the end of the upcoming trading week, the United States on Friday releases perhaps its most anticipated monthly economic release, October data, which recently proved difficult for the markets.

Coming week

All times shown are EDT

Sunday

9.45 p.m .: China – : should remain stable at 50.0.

On Monday

5.30 p.m .: United Kingdom – : is expected to remain stable at 57.7.

11:00 am: United States – : saw a slight drop to 60.5 from 60.1.

7:50 p.m .: Japan –

11:30 p.m .: Australia – : should keep rates at 0.10%.

Tuesday

4:55 am: Germany – : is expected to remain stable at 58.2.

Wednesday

5.30 p.m .: United Kingdom – : to stay at 58.0.

8:15 am: United States – : should dive from 568K to 400K.

10:30 am: United States – : showed a build of 4.267 million barrels last week.

11:00 am: United States – : saw increase to 62.1 from 61.9.

2:00 p.m .: United States –

Thursday

5.30 p.m .: United Kingdom – : probably climbed to 54.0 from 52.6.

8:00 am: United Kingdom – BoE interest rate decision: should keep rates at 0.10%.

8:30 am: United States – : should go from 281K to 275K.

Friday

8:30 am: United States – Non-farm payroll: forecast is expected to drop from 194K to 413K.

8:30 am; WE – : seen to fall to 4.7% against 4.8%.

8:30 am: Canada – : is expected to drop to 50.0K from 157.1K.

10:00 am: Canada – : The September impression stood at 70.4.

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