Next Week's Focus: Key Market Drivers

Seemingly, the easing of Wall Street's anxiety regarding recent US economic data, including employment figures and the PCE index, has brought investors back to calculated risk-taking. As the Federal Open Market Committee (FOMC) meeting approaches, all eyes are on the interest rate decision and future monetary policy outlook.

Key Events of the Week

* Tuesday: The New York Federal Reserve Bank's November survey of one-year inflation expectations, along with the Job Openings and Labor Turnover Survey (JOLTs) report for October, measuring available job openings. * Wednesday: The FOMC announces its interest rate decision and provides a summary of economic projections. This will be followed by a press conference by Fed Chair Jerome Powell, who will offer further insights into the central bank's perspective. * Thursday: US weekly initial jobless claims data, along with the September trade balance. * Friday: The Fed's quarterly Flow of Funds report, which includes data on the financial health of US households. Additionally, the day's events will include speeches from Fed officials on the economic outlook.

Market Expectations vs. Fed Projections

The Fed's September dot plot indicated two potential rate cuts in 2026. However, markets are currently anticipating a more aggressive easing of monetary policy, with up to 63 basis points of cuts priced in by the end of 2026, suggesting a possibility of at least three rate cuts next year.

Conclusion

Next week will be crucial in determining the trajectory of US monetary policy. Investors will closely monitor the Fed's decisions and officials' statements, along with key economic data, to assess the outlook for growth, inflation, and interest rates.

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