In this coming week, investors will be closely watching Tuesday’s US CPI data along with the meeting of the US Federal Reserve which concludes on Wednesday. The Fed’s final policy decision for the year will almost certainly be to keep interest rates on hold but clues may be given by policy makers regarding if/when cuts will come in 2024. With evidence of cooling in the US jobs market and inflation falling faster than the Fed expected, optimism is increasing that the initial cut will come in the first half of the new year.
In terms of relative regional performance, last week was a repeat of the previous week with US and European stocks higher and Asian markets mixed (India was again an outlier, having a very strong week). Hopefully the end-of-year rally will continue for both equities and bonds.
Last week’s data showed US ISM Services PMI rise more than expected – increasing to 52.7 in November and beating forecasts of 52. The US jobs report on Friday showed the economy added 199,000 jobs in November which was better-than-expected. Stocks, the US Dollar and the yield on the 10-year US Treasury all rose after the report.
In the UK, the Bank of England policy makers meet this week. It is expected that rates will be kept on hold at a 15-year high.
US Risk Barometer 8th December 2023
Europe Risk Barometer 8th December 2023
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