Top 5 Things to Watch in the Markets in the Week Ahead By Investing.com

By Noreen Burke

Investing.com — Wednesday’s Federal Reserve meeting minutes will be the main highlight of a shortened week as investors watch for any signs that the pace of rate hikes may be slowing. The most important shopping period of the year kicks off on Friday in what will be a key test for US retailers. The latest global economic forecast from the OECD on Tuesday along with global PMI data will provide important insight into the health of the global economy. Meanwhile, China may step up its economic support measures and there are signs that the king of the dollar may be on the verge of losing his crown. Here’s what you need to know to start your week.

1. Fed Minutes

The Fed is set to release the minutes of its November meeting on Wednesday with investors eager for any signs that policymakers may be considering slowing the tightening process after raising rates faster this year than at any time since. the 1980s.

Fed Chairman Jerome Powell and other policymakers have signaled that the central bank may skip next month to avoid tightening more than necessary and sending the economy into recession.

At the same time, Powell said rates may ultimately have to rise above the 4.6% that policymakers in September thought would be needed next year.

The economic calendar for the week ahead also includes , , for October and November data.

2. black friday

Amid soaring inflation and rising interest rates, a key test of consumer demand comes November 25, when retailers kick off “Black Friday” sales – traditionally one of the days of strongest shopping of the year.

Recent data showed U.S. retail sales rose more than expected in October, indicating that consumers may be on more solid footing heading into the end of the year. Consumer spending accounts for more than two-thirds of US economic activity.

Retailers have delivered mixed results over the past earnings season. Last week, Walmart (NYSE:) raised its full-year sales and profit forecast as demand for groceries was expected to hold up despite higher prices, while Target (NYSE:) predicts a surprise drop in sales during the holiday quarter after warning of “dramatic shifts” in consumer behavior that are hurting demand.

Amazon (NASDAQ:), the world’s largest online retailer, said Oct. 27 that it was bracing for slower growth because “people’s budgets are tight” due to inflation.

3. OECD forecasts/PMI data

The OECD will release its latest forecast for the global economy on Tuesday and that, along with preliminary readings of business activity in November from a number of countries, will give some insight into the health of the global economy.

The latest OECD forecasts, made in September, already indicated a deteriorating outlook for next year, with the US economy set to slip into recession.

PMI data from the US, US and US on Wednesday could add to the gloom. In most European countries, PMIs are below the 50 mark that separates expansion from contraction.

Britain is already facing a long recession. Eurozone economic growth has held up better than expected and labor markets remain relatively robust. But recession risks still loom amid energy shortages and high inflation.

4. Did the dollar break through the top?

The peaked at a 20-year high of 114.78 in September and has been falling ever since. With the currency on course to post its biggest quarterly loss since the second quarter of 2017, investors are now wondering if it has passed the peak.

The rising dollar has been a dominant trading theme in 2022, thanks to the Fed’s rapid rate hikes, giving the currency an edge over its peers among investors.

But analysts at Goldman Sachs said Friday that a top in the dollar still looks to be “several quarters away,” noting that he doesn’t expect the Fed to embark on easing until 2024. He added that US growth is unlikely to bottom out anytime soon.

5. China

The Chinese central bank’s commitment to stepping up supportive policy measures is expected to be on display Monday, when setting key lending rates.

The People’s Bank of China is expected to keep key lending rates unchanged for the third consecutive month as policymakers are reluctant to push lower by further easing monetary conditions.

Authorities are looking for ways to sustain economic growth without triggering financial instability.

Other regional central banks will also hold policy meetings during the week. The Bank of Korea is expected to make a giant 75 basis point hike on Wednesday, while the Bank of Korea is expected to tighten again, but perhaps only a quarter of a point.

–Reuters contributed to this report