A busy week ahead as markets wind down for the Christmas break…
Even though many participants will be looking to square off their positions for the year and begin to wind down for the holiday period, they won’t be able to without facing one final action-packed week. Not only are we confronted by a highly anticipated meeting and announcement from the Federal Reserve but we’ll also observe similar announcements from the Bank of England and the Bank of Japan.
Focusing on the Fed – it’s widely expected they’ll increase their benchmark interest rate from 2.25% to 2.5%, in line with the 4 rate hikes they touted for 2018. The main attention will be paid to their guidance for 2019. The Fed have observed significant amounts of volatility across 2018 – a bi-product of the steep path for interest rates they’ve taken. The key question on investors’ minds is whether they will take their foot off the gas in 2019 or still maintain an aggressive stance. The meeting takes place across Tues/Wed with the decision and announcement taking place Wednesday evening.
Both the Bank of England and Japan are in the same position in the sense that they’re both expected not to take any action come Thursday when their announcements are due. As with the Fed, much of the emphasis will be on what they indicate for future policy.
Additional economic reports to monitor this week – UK inflation and retail sales/US housing and GDP data.
Written by Vivek Savani. 8:51am, December 17th 2018
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