Markets Eye PCE Data and Fed Minutes in Thanksgiving-Shortened Week
The global financial markets are gearing up for a crucial week of economic indicators and central bank developments, despite the shortened trading schedule due to the U.S. Thanksgiving holiday.
Key focus areas include the Federal Reserve’s preferred inflation gauge (PCE), FOMC minutes, and critical rate decisions from the RBNZ and Bank of Korea.
U.S. Markets at a Glance
Wall Street showed resilience last week, with the Dow Jones Industrial Average gaining nearly 2%, while the S&P 500 and Nasdaq Composite added over 1.5%. Markets will observe reduced hours, with a full closure on Thursday for Thanksgiving and an early close on Friday at 1:00 PM ET.
PCE Data Takes Center Stage
The Personal Consumption Expenditures (PCE) index, scheduled for Wednesday, commands particular attention. Economists anticipate the core PCE to show a 2.8% annual increase in October, up from September’s 2.7%. This uptick could significantly influence the Federal Reserve’s December policy decision.
Fed Governor Michelle Bowman recently expressed concern that progress toward the 2% inflation target has “stalled,” suggesting a cautious approach to future rate adjustments. Market pricing now shows a 44% probability of no rate cut in December, up from 24% a month ago.
Global Central Bank Activity
The Reserve Bank of New Zealand (RBNZ) faces a critical decision, with markets pricing a 70% chance of a 50-basis-point rate cut to 4.25%. Their October meeting already saw a 50-basis-point reduction, reflecting confidence in controlling inflation within their 1-3% target range.
Meanwhile, the Bank of Korea is expected to maintain current rates after its October cut to 3.25%. Recent economic data, including softer GDP growth and inflation figures, suggests careful monitoring of future policy decisions.
European Economic Outlook
The Eurozone’s HICP (Harmonized Index of Consumer Prices) forecast indicates an uptick to 2.4% from 2.0%, with the super-core metric expected to rise to 2.9%. This data comes as the ECB weighs potential rate adjustments, with markets now pricing a 60% probability of a 50-basis-point cut.
Market Implications
These economic indicators arrive at a crucial juncture for global markets. Bitcoin has surged nearly 50% since the U.S. election, reflecting increased risk appetite. Wall Street analysts have begun issuing optimistic 2025 outlooks, with S&P 500 targets ranging from 6,400 to 7,000.
Corporate Earnings Watch
The week also features significant earnings reports from major companies, including:
- Technology sector: Zoom, Dell, CrowdStrike
- Retail industry: Best Buy, Macy’s, Burlington Stores
- Financial services: Various regional players
Looking Ahead
As markets navigate this data-heavy week, investors must balance multiple factors:
- Inflation trends and central bank responses
- Holiday season retail performance
- Global growth indicators
- Political and regulatory developments
The convergence of these factors during a shortened trading week could set the tone for market movement through year-end and into 2025.