Wall Street will be tense due to two big events. This is because the disinflation trading may have gotten ahead. The November inflation report will be the final piece of economic news prior to the Fed meeting. It is expected that it will show pricing pressures decreasing. The headline reading from one month ago is expected rise by 0.3%. This is just a tad lower than the October pace. Inflation is expected to fall from 7.7% to 7.3% over the past year. Although there is still much to do in bringing down inflation, the trend seems to be moving in the right direction.
The FOMC decision will be “Must See TV” as the Fed is expected to downshift to a half-point rate-hiking pace and yet still reiterate that they are not done raising rates. It is likely that the Fed will show that rates could go up anywhere between 4.75 and 5.25%. This will be extremely restrictive and should result in a faster cooling of labor markets.
The ECB meeting next week promises to be a defining moment in the bloc’s fight against inflation. Although it was late, it was very late, but it soon caught up and culminated in a 75-basis point rate increase last week. It’s believed it…