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The Outlook on U.S. Data
Investment enthusiasts shall have one last peek at this year's inflation via the personal consumption expenditures report slated for release on Friday. This report doubles as the Federal Reserve's primary inflation barometer. Analysts forecast that the PCE price index may maintain its neutral position for the second consecutive month in November, while the core index, which excludes unpredictable energy and food costs, may record a 0.2% increase.
Apart from this, key data around consumer confidence, initial jobless claims, and durable goods orders are also on the horizon. Reports on new and existing home sales will inform updates on the housing arena. There is also scheduled talk from Raphael Bostic, the Atlanta Fed President, on Tuesday.
Anticipating a Santa Claus Rally?
Despite the Dow Jones Industrial Average recording another unprecedented peak close last Friday and the S&P 500 staying mostly steady, they managed to mark a seven-week unbroken winning streak - the most extended weekly ascension since 2017.
Optimism among investors somewhat cooled down after John Williams, the Fed Bank of New York President, indicated on Friday that rate cuts discussions were premature. Referring to Jerome Powell, the Fed Chair, Kim Forrest of Bokeh Capital Partners suggested that this week hinted Powell's unwillingness to excessively burden the economy with no substantial reason to uphold higher rates for a longer period.
Bank of Japan on a Policy Pivot
There is a growing anticipation that the Bank of Japan may cease its negative interest rates in the near future, making it an anomaly as significant central banks worldwide, including the Federal Reserve, shift focus to when rate-cuts should be introduced.
While not imminent in the BOJ's upcoming Tuesday policy session, investors will be closely monitoring the bank's rate statement for any clues about the much-anticipated pivot during their January meeting. With the Fed's dovish tilt and the anticipation around the BOJ's move, the yen has strengthened, hitting the high side of 141 against the dollar for the first time since July.
Gold Demonstrates Progressive Anuual Gains
Gold is on course to register its inaugural annual growth since 2020. Bolstered by a weakening US dollar and the growing anticipation for 2024's rate cuts, zero-yield bullions have become more attractive thanks to lower interest rates.
Despite a near record setback, gold has still managed to break over $2000 an ounce, even with the strongest U.S. 10-year yields in the past eight years. Inflationary-adjusted gold still hovers 20% below its historic high point of $2,500 in 1980.
Current U.K. Economic Data
At present, the U.K. inflation surpasses the Bank of England's 2% target by more than double. The recent data to be released on Wednesday is likely to corroborate that price pressures remain high when compared to other major economies. Sterling reached a three-month-high against the Euro following a sharp drop in Eurozone inflation, stoking beliefs that it may take longer for the BoE to reduce rates than the European Central Bank.
