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

By Noreen Burke

Investing.com — The week is shaping up to be quiet on the economic data front and Federal Reserve policymakers are in their traditional blackout period ahead of their last policy meeting for 2022. Investors will be eyeing inflation data of Friday’s U.S. producer prices for clues about how hawkish the central bank may be after four straight rate hikes to tackle decades-high inflation. OPEC+ ministers are to decide on production targets, while the Reserve Bank of Australia and the Bank of Canada are to make decisions that will be closely watched on interest rates. Here’s what you need to know to start your week.

1. US data

The United States is due to release November PPI data on Friday, with the overall figure expected to rise year-over-year, slowing slightly after an 8% increase the previous month. , which eliminates food and energy costs, should also cool down.

Fed Chairman Jerome Powell said last week it might be time to slow rate hikes, raising hopes the central bank was closer to the end of its tightening cycle, but Friday showed that the Hiring remained strong last month as average hourly earnings rose, the outlook is clouded. .

The United States is due to release CPI data next week before the Fed’s last meeting of the year on December 13-14.

Along with the PPI numbers, this week’s economic calendar also includes Monday, as well as the University of Michigan’s weekly report and Thursday.

2. OPEC meeting

Representatives of OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies including Russia, were meeting on Sunday to discuss production targets after the Group of Seven agreed to an oil price cap Russian.

The G7 nations and Australia agreed on Friday to a $60-a-barrel price cap on Russian maritime crude oil in a bid to starve President Vladimir Putin of revenue while keeping Russian oil flowing to markets global.

Moscow said it would not sell its oil below the cap and was considering how to respond.

OPEC+ angered the United States and other Western countries in October when it agreed to cut production by 2 million barrels per day from November to the end of 2023. Washington accused the group and one of its leaders, Saudi Arabia, to side with Russia despite the Moscow war. in Ukraine.

OPEC+ argued that it had cut production due to a weaker economic outlook. Oil prices have fallen since October due to COVID lockdowns in China, slowing global growth and rising interest rates.

3. Shares

Last week, the , and the all recorded their second consecutive weekly gains, with the Nasdaq rising 2% in the lead. The S&P gained 1% on the week while the Dow Jones rose 0.2%. Markets recovered from lows on Friday after November’s strong jobs report raised doubts about the Fed’s ability to slow the pace of rate hikes.

Investors have been looking for signs of weakness in the labor market, particularly wages, as a precursor to a faster cooling in inflation that will allow the Fed to slow down and possibly halt its current rate hike cycle. .

Stocks had rebounded earlier in the week after Powell’s comments about scaling back interest rate hikes as early as December.

However, while Chicago Federal Reserve Chairman Charles said on Friday that the Fed is likely to hit a slightly higher key rate, he still talked about slowing the pace of rate hikes from recent rate hikes. 75 basis points.

4. Central bank decisions

Markets expect the cash rate to remain unchanged at 2.85% at its next meeting on Tuesday, after inflation slowed sharply in October, but economists forecast another increase of a quarter of basis point before policymakers pause the current rate hike cycle.

That wouldn’t necessarily shorten a rally in the US, which has recently been driven more by China’s reopening hopes and a weaker greenback than by the RBA.

Meanwhile, markets and economists are divided on whether the will raise rates by 25 or 50 basis points when it meets on Wednesday.

The BOC has raised rates by 350 basis points since March, one of its steepest ever tightening cycles.

5. Eurozone

European Central Bank President Christine Lagarde is due to make two appearances this week ahead of the start of the ECB’s blackout period ahead of its final policy meeting of the year on December 15.

Markets are tilting towards a 50 basis point rate hike at the next ECB meeting after data last week showed eurozone inflation eased much more than expected in November.

With inflation well above its 2% target, the ECB has raised rates at its fastest pace on record this year and a series of hikes over the next few months is still likely.

But some policymakers have recently argued for a slower pace of increases after back-to-back moves of 75 basis points, arguing that inflation is finally peaking.

–Reuters contributed to this report