Breaking News
LAST CHANCE for Cyber Monday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Week Ahead: Who Will Lead The Fed?

By MarketPulse (Craig Erlam)Market OverviewNov 20, 2021 11:40PM ET
www.investing.com/analysis/week-ahead-who-will-lead-the-fed-200609007
Week Ahead: Who Will Lead The Fed?
By MarketPulse (Craig Erlam)   |  Nov 20, 2021 11:40PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

And what next for Europe?

Lockdowns have returned in Europe and suddenly everyone is analyzing the data to see which countries will be next. Germany may not be far behind as cases spiral out of control and others may follow in the weeks and months ahead.

Suddenly the topic of conversation may be about to change. From the consequences of not dealing with inflation to the economic hit from winter lockdowns. Of course, the two are very much linked as central banks are all too aware as they attempt to navigate these unusual and uncertain times.

On the subject of central banks, we should soon learn who’s going to lead the Federal Reserve when Jerome Powell’s term as Chairman ends in February. Powell remains the favorite to secure another term, while Lael Brainard is also very much in the race. There are reasons to think she may be preferred among Democrats, not least as she’s viewed as being more dovish than Powell, which has its appeal. We’ll soon see who the President prefers.

US

Wall Street will finally find out if President Biden wants to have a change at the head of the Fed. Expectations are still for Fed Chair Powell to get renominated, but the odds have dropped over the past couple of months. Powell is still around a 2 to 1 favorite and the market impact might be minimal if Biden nominates Lael Brainard. Brainard running the Fed would be viewed as being slightly more dovish which could delay interest rates hikes. The immediate impact in the markets may well be a drop in short-term interest rates.

On Tuesday, the release of the November flash PMI readings should show a modest pickup in both the manufacturing and service sectors. Wednesday is mostly about the release of the FOMC minutes from the Nov. 3rd dovish taper announcement. Some traders will pay close attention to both personal income and spending data that should show increases from the prior month, bolstering the case that the US consumer is still in good shape.

With US bond and equity markets closed to observe Thanksgiving Day on Thursday, liquidity should be light for the remainder of the week. This Black Friday will not draw its normal attention as many retailers will struggle to provide attractive deals given the strong demand and tight inventory situation that should last throughout the entire holiday season.

EU

Austria delivered the markets a shock to end the week. The country is going into full lockdown for up to (at least?) 20 days. With the case and fatality rates looking remarkably similar to Germany, will they and others follow? Investors seem to think so. Recently, all the talk has been about inflation. While lockdowns will surely exacerbate the problem in the months ahead, the topic of conversation may be about to change.

While all central banks are coming under the spotlight at the moment, the ECB by comparison is in a rather luxurious position. Inflation is running at more than double its target but that’s expected to fall at the turn of the year, much earlier than in other countries, and then back below target over the medium term.

The ECB has spent the last decade fighting the risk of deflation more than inflation and a history of low price pressures will stand it in good stead in these troubling times. It’s not immune, but it’s among the best positioned.

The ECB accounts should reinforce the view that inflation is not expected to become a problem and should return below target without the need for rate hikes next year. President Christine Lagarde will likely reinforce this shortly after the minutes on Thursday, as she has repeatedly since the meeting. Flash PMIs are the standout economic releases next week, alongside the German Ifo, Gfk and GDP readings.

UK

The BoE has backed itself into a corner in recent weeks. First, it talked up a rate hike ahead of the November meeting, only to vote heavily against it. Then they blamed a lack of information on the end of the furlough scheme for holding off on raising rates.

The first of the furlough data is out and it doesn’t look too bad at all. The next jobs report, which will give the full picture, will be released on 14 Dec., a day before the November inflation data and two days before the next MPC meeting. By then it may have run out of excuses, which is what the market is positioning for.

There’ll be plenty of opportunities for policymakers to backtrack before then, if they wish, with many of them making appearances this week including Governor Andrew Bailey on Thursday. Flash PMIs on Monday are the only other noteworthy event next week.

Russia

A couple of notable economic releases over the coming week including industrial production and PPI. The currency has fallen over the last week as oil has come off its highs and hit a six week low on Friday.

South Africa

After raising interest rates last week and starting the normalization cycle, eyes will be on the PPI data this week for further signs of a build-up of inflationary pressures. More hikes are coming over the next couple of years, with the current level still well below its neutral rate. The economy is still in need of support and the process will be gradual.

Turkey

The CBRT cut interest rates by 100 basis points to 15% and signaled it may do so again in December before evaluating its easing cycle. Erdogan’s promise to fight against interest rates is going well; if only he had the same disdain for inflation.

Unsurprisingly, the market is not forgiving of such unconventional policies, or a central bank Governor that’s a puppet for the President, and the lira has once again been spiraling lower. The dollar was above 11 against the lira for the first time ever and there doesn’t seem to be much appetite to take the opposite view on the currency.

China

The one and five year Loan Prime Rates are expected to be left unchanged early this week even as the economy continues to face significant headwinds. The PBOC may opt for an RRR cut in the coming months as an alternative way to stimulate the economy.

The property market is one of the primary areas of weakness for the Chinese economy as the restructuring of Evergrande (HK:3333) continues to weigh heavily on the sector. The sale of its entire stake in streaming company HengTen Networks (HK:0136) for $273m will help to keep the wolf from the door for now, but the debt repayments will keep on coming.

The company is successfully buying time at a significant cos,t but a more sustainable solution is essential, for the rest of the industry and every other that relies on it, which combined accounts for around 25% of the economy.

India

No major data or events next week for India.

Australia

The RBA continues to push back against market expectations for a rate hike next year, with the first currently priced in for next summer. This has been a constant theme recently for central banks in general, but the RBA may have done itself no favors when it was bullied off its yield target policy days before a meeting.

PMIs on Monday and retail sales on Friday are the standout data releases. We’ll also hear from Assistant Governor Michele Bullock on Wednesday.

New Zealand

The RBNZ is expected to continue its tightening cycle and raise interest rates by 25 basis points on Wednesday, taking it to 0.75%. Higher inflation and a tighter labor market may tempt policymakers into a 50 basis point hike though, with the next meeting not due to take place until February.

Retail sales are also due on Monday.

Japan

The core Tokyo inflation reading is expected to rise to 0.4% next week, up from 0.1%, as higher imported oil and food lifted prices. The impact should be temporary though and won’t have any impact on the BoJ decision to keep rates at rock bottom levels.

Key Economic Events

Sunday, Nov. 21

Chile’s presidential election

Monday, Nov. 22

  • ECB members Holzmann, Kazaks and Kazimir, alongside Czech National Bank Governor Rusnok speak at the Austrian central bank conference on European economic integration.
  • UK Labour leader Keir Starmer delivers the keynote address at the nation’s business organization’s CBI 2021 Annual Conference
  • US trade representative Tai is in India for trade talks.

Economic Data/Events

  • US existing home sales
  • China loan prime rates
  • Eurozone consumer confidence
  • Turkey consumer confidence, foreign tourist arrivals
  • Spain trade
  • Poland PPI, industrial, construction output

Tuesday, Nov. 23

  • BOC Beaudry speaks to the Ontario Securities Commission.
  • BOE policymaker Haskel speaks at the Adam Smith Business School on “High inflation now and then.”
  • EU general affairs council meeting in Brussels.

Economic Data/Events

  • US Nov Prelim manufacturing PMI: 59.0e v 58.4 prior
  • European Flash PMIs: Eurozone, Germany, France, and the UK
  • Mexico international reserves
  • Singapore CPI
  • Poland retail sales
  • Israel leading ‘S’ indicator

Wednesday, Nov. 24

Economic Data/Events

  • FOMC minutes
  • US consumer income, wholesale inventories, new home sales, Q3 GDP, initial jobless claims, durable goods, University of Michigan consumer sentiment
  • Germany IFO business climate
  • RBNZ Rate Decision:
  • France manufacturing confidence
  • Russia industrial production
  • New Zealand rate decision: Expected to raise cash rate 25 basis points to 0.75%.
  • Singapore GDP
  • South Africa BER business confidence
  • Turkey capacity utilization, real sector confidence
  • Russia industrial production, PPI, CPI
  • BOE policymaker Silvana Tenreyro speaks at the Oxford Economics Society.

Thursday, Nov. 25

  • US equity and bond markets closed in observance of Thanksgiving Day.
  • BOE Governor Bailey speaks at a Cambridge Union event.
  • ECB chief Lagarde and board members Elderson, Schnabel, Panetta and Lane speak at the ECB legal conference on continuity and change.

Economic Data/Events

  • Germany Q3 Final GDP
  • Mexico Q3 Final GDP; Minutes released
  • New Zealand Trade
  • Hong Kong Trade
  • Sweden Rate decisions: Expected to keep rates steady at 0.00%
  • Hungary Rate decisions: Expected to increase interest rates again.
  • Germany consumer confidence
  • South Africa PPI
  • Russia gold and forex reserves

Friday, Nov. 26

Economic Data/Events

  • Australia Retail sales
  • Sweden Retail sales
  • Tokyo CPI
  • Mexico trade
  • Singapore industrial production
  • Switzerland GDP
  • France Consumer confidence
  • Italy Consumer confidence
  • Russia money supply
  • BOE’s Pill speaks to CBI North East on the economic outlook.

Sovereign Rating Updates

  • Ireland (S&P)
  • Belgium (Moody’s)
  • Switzerland (Moody’s)
  • Poland (DBRS)

Original Post

Week Ahead: Who Will Lead The Fed?
 

Related Articles

Week Ahead: Who Will Lead The Fed?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email