Upcoming This Week: Fed’s Minutes, CSI Figures, U.S Market Close

On Wednesday, the Federal Reserve will publish the minutes from the most recent FOMC policy meeting, which took place earlier this month, and the final November rating of the Consumer Sentiment Index (MCSI) which measures consumer confidence, will be revealed by the University of Michigan. Markets will be closed for the Thanksgiving holiday on Thursday, and will shut early on Friday, making for a holiday-shortened week in the United States. Black Friday sales will be eagerly watched by economists as they are thought to be a significant indicator of consumer confidence and the health of the retail industry going into the holiday shopping season.

Is a Slowdown on the Horizon?

As central bank members declared in several statements throughout the week that they intended to continue with an aggressive policy tightening leading to the fall of major indices last week; the S&P 500 (USA 500) dropped nearly 0.7%,  and the Nasdaq (US-TECH 100) fell by almost 1.2%.

The Fed is expected to publish the minutes of the November meeting on Wednesday. Investors are anticipating any indication that the Fed may be considering halting the tightening process after raising rates more quickly this year than at any point since the 1980s. 

In order to avoid tightening more than is necessary and causing the economy to enter a recession, Fed Chair Jerome Powell and other policymakers have hinted that the central bank may switch to lower rate increases next month. A half-point rate hike is likely at the December meeting, and Powell has acknowledged that rates may ultimately need to rise above the 4.6% that policymakers believed they would require by the end of the year. In a post-meeting press conference this month, Fed Chair Jerome Powell acknowledged that the inflation situation has grown more difficult and that he and his colleagues still have some distance to cover in terms of reducing rapidly rising prices. (Source:Yahoo Finance)

Consumer Confidence Decline

The final November reading of the Consumer Sentiment Index (CSI) will be released by the University of Michigan on Wednesday (MCSI). Analysts expect a reading of 54.7, which is unchanged from the preliminary estimate made public earlier this month and far lower than the previous forecast of 59.9 from October. Recent weeks have seen a decline in consumer confidence due to rising interest rates, stubbornly high prices, and uncertainty around the results of the 2022 midterm elections. The index value right now is just above 50, which is slightly higher than the all-time low set in June and the lowest since July.

OECD Forecasts & PMI Data

Tuesday will see the release of the OECD's most recent forecasts for the world economy, which together with early estimates of business activity in November from various nations, will provide an overview of the state of the global economy. The most current predictions from the OECD, released in September, already indicated a deteriorating outlook for next year, with the U.S. economy predicted to enter a recession.

On Wednesday, PMI data from the U.S., U.K., and the Eurozone might make things even worse. The majority of European nations' PMIs are below the threshold of 50, which distinguishes growth from recession. A protracted recession is already underway in Britain. The economic expansion in the Eurozone has fared better than anticipated, and its labour markets are still in good shape. However, perhaps due to energy shortages and high inflation, recession threats continue to loom. (Source:Investing)

Black Friday 2022

An important test of consumer spending will occur on November 25 when retailers start their "Black Friday" discounts, historically regarded as one of the year's biggest shopping days, against a backdrop of skyrocketing inflation and interest rate hikes.

According to recent data, U.S. retail sales increased more than forecasted in October, suggesting that consumers may be in a better position going into the end of the year. More than two-thirds of economic activity in the United States is made up of consumer expenditure.

Results from Retailers’ recent earnings season reports have been inconsistent. While Target (TGT) predicted a surprise decline in holiday shopping after warning of abrupt shifts in consumer preferences that were negatively impacting demand, Walmart (WMT) lifted its annual revenue and profit forecast last week as it was anticipated that demand for groceries would withstand despite increased costs. Amazon (AMZN) stated on October 27th that it was bracing for sluggish growth since wallets are tight as a result of the economic crisis.

With all of the aforementioned economic indicators set to be released this week, traders and investors alike are set to receive some important information regarding the state of the American economy as well as markets worldwide. However, it is far from certain that the coming days will hold good tidings for those hoping for a reprieve from market volatility going into the holidays.