Are the PCE core deflator and Chairman Powell’s speech the key points this week?
The week started with a risk-averse market originating in China.
Economic statistics showed a significant slowdown in industrial enterprise profits in October from the previous report. In addition, China’s asset management giant Zhongsha Enterprise Group announced that it has a yen-equivalent debt overhang of JPY 5.4 trillion, exposing the shadow banking problem. The recent surge in respiratory diseases in China has also cast a shadow over the market mood, recalling the new corona disaster.
In the foreign exchange market, the yen has been under widespread pressure, although not in a panic-like manner. The dollar/yen was hovering in the upper 149 yen range before temporarily falling below the 149 yen level. The cross-yen also sold off more towards the afternoon in Tokyo. At present, the strengthening of the yen has somewhat subsided. However, the London market is not expected to have any significant material scheduled later in the day, and the risk-averse mood is likely to be dragged down. Expect new material to emerge, such as US Thanksgiving-related retail trends.
Materially this week. A less substantial week. The main focus of attention will be on Thursday 30. US PCE core deflator and ISM Manufacturing Index on Friday 1 December, and Chairman Powell’s panel discussion by Chairman Powell.
US stocks have risen remarkably this month. Under these circumstances, financial conditions are easing, Chairman Powell would want to make sure that inflation does not re-accelerate. Powell will want to make sure that this does not lead to a re-acceleration of inflation. The rate hike is not a If it is made clear that interest rate hikes are The Fed will want to make it clear that interest rate hikes are over, further boost stock prices and re-stimulate inflation. and re-stimulate inflation.
The market, on the other hand, will say that rate hikes are over and that monetary easing is the only way forward, The market, on the other hand, tends to lean in the direction that interest rate hikes are over, monetary easing is the only way forward The VIX index is at a very low level of 13. The VIX index is at a very low 13. This optimism could be shaken at some point. could be shaken at some point.
In this context, the OPEC+ meeting on Thursday will also be of interest. OPEC+ will also be of interest. Probably, Saudi Arabia will do its best to cut production. agreement. In the unlikely event that no agreement is reached, If no agreement is reached and the price of crude oil falls sharply, interest rates will fall sharply and the yen will react by appreciating.