With a December rate rise pretty much in the books, investors will turn their attention to signals about future moves when the Federal Reserve meets next week.
Here’s what to watch in the coming days.
Markets have in recent weeks priced in a 100 per cent chance that the Fed lifts interest rates for the first time in a year, by 25 basis points, when it meets next week. But investors will look beyond the rate decision to the summary of economic projections, particularly the so-called dot plot of interest-rate projections, and Fed chair Janet Yellen’s press conference as they try to guess at future rate rises.
“We do not expect a change in the dot plot from the September meeting,” Michelle Meyer, economist at Bank of America, said. “That said, the risks are asymmetric in that there is a better chance of a move higher than lower in the trajectory.”
And with central banks around the world now expecting the baton to pass from monetary to fiscal policy, investors will also watch for her remarks on proposals ranging from tax reform to deregulation. “It is too early for the Fed to change its outlook based on Donald Trump,” Alan Levenson, Chief Economist at T. Rowe Price, said. “The Fed won’t talk about Mr Trump and fiscal policy and not just during the press conference, but also during the meeting, [as] that could show up in transcripts.”
Instead, most expect Ms Yellen’s Congressional testimony from November to serve as a blueprint. She is expected to urge lawmakers to focus on boosting productivity and to note the importance of regulatory reforms in helping stave off another financial crisis.
Not even the threat of an interest rate hike next week from the Federal Reserve could derail the U.S. stock market’s record-setting run as Wall Street posted its best five days since the presidential election and doubled down on its bet of better times ahead under new political leadership at the White House.
The bullish vibe on Wall Street is best illustrated by the blue chip Dow Jones industrial average, which surged nearly 600 points, or 3.1%, on its way to posting a fresh all-time high on each trading day of the just-ended week.
The Dow, which is up 13.4% this year, is now within 243 points of Dow 20,000, a milestone few imagined was possible at the bottom of the bear market back on March 9, 2009, when the Dow fell to 6,547.05.
The Standard & Poor’s 500 index, Nasdaq composite and small-stock Russell 2000 also finished the week at record levels.
The big gains came even though Wall Street is pricing in a nearly 100% chance of an interest rate hike from the Federal Reserve Wednesday, its final meeting of the year. Wall Street is expecting a quarter of a percentage point rise by the Fed, which would mark the U.S. central bank’s first rate hike of 2016, despite forecasts at the start of the year for three or four hikes.
Following the Fed’s meeting Wednesday, Wall Street’s attention will turn to its policy statement, its updated projections for the economy, inflation and future rate hikes, as well as Fed chair Janet Yellen’s comments during a press conference with reporters.
The big run-up in stock prices, up to this point, has been based mainly on hopes that Trump’s policies will boost economic growth as well as corporate sales and profits
Mexico could contribute as much as 150,000 barrels per day to non-OPEC oil cuts – OPEC source.
Russia has already said they would cut output by 300,000.
The non-OPEC members meet with OPEC members in Vienna tomorrow.
in other Mexican news Fitch downgrades outlook for Mexico to negative.
As per Fitch:
The revision in Mexico’s Outlook reflects increased downside risks to the country’s growth outlook and the challenges this could pose for stabilization of the public debt burden. Growth has been under-performing rating peers and the general government debt burden has been increasing steadily in recent years. The victory of Donald Trump in the U.S. presidential election has increased economic uncertainty and asset price volatility in Mexico as the President-elect has alluded to renegotiating or terminating the North American Free Trade Agreement (NAFTA) with Mexico and tightening immigration controls.
Web-based digital currency bitcoin hit its highest levels in almost three years on Friday, extending gains since India sparked a cash shortage by removing high-denomination bank notes from circulation a month ago.
Bitcoin was trading as high as $774 on the New York-based itBit exchange, up almost 1 percent on the day and the highest since February 2014, having climbed almost 9 percent in the past month.
Bitcoin is a cash alternative that can be used for moving money across the globe quickly and anonymously with no need for a central authority to process transactions. It has climbed around 80 percent so far this year, far exceeding its 35 percent rise in 2015.
Indian prime minister Narendra Modi announced a shock move on Nov. 8 to ditch 500 and 1,000 rupee notes – worth a combined $256 billion – that he said were fuelling corruption, being forged and even paying for attacks by militants who target India.
The cryptocurrency’s value has been highly volatile – after rocketing above $1,100 in 2013, it had fallen to around $150 by early 2015. But it has since stabilized, staying above $500 for the past six months.
Back in March, when the ECB unexpectedly announced it would begin buying corporate bonds, while the German population was rather angry, its media was furious. The best example of the fury came from Germany’s Handelsblatt, which in an article titled “The dangerous game with the money of the German savers”, the authors provide a metaphorical rendering of what is happening in Europe as follows:
The publication also painted a caricature of the man behind Europe’s monetary policy: