Key events in developed markets next week

The Thanksgiving holiday in the US means a short week with the data flow concentrated on Wednesday. The highlight may well be the minutes to the November 3rd FOMC meeting when the Federal Reserve announced the start of QE tapering. Monthly asset purchases have been trimmed $15bn from $120 bn, but the accompanying statement suggested that they would be “prepared to adjust the pace of purchases if warranted by changes in the economic outlook”. St Louis Fed President James Bullard has proffered support for tapering by $30bn per month and we will be looking to see if the minutes shed light on what the criteria might be to justify such action. With the economy likely to grow in excess of 6% annualized in the current quarter and inflation to average around 6.5%, the case for a swifter path to policy “normalisation” is strong.

In terms of the data, we expect a modest upward revision to 3Q GDP growth, but the October personal spending will be more significant as it tells us how the fourth quarter started. Based on retail sales it should be good while the Fed’s favoured measure of inflation, the core PCE deflator, will continue pushing higher and on an annual basis come in double the 2% target. Home sales numbers are not expected to move much on the month, but the increase in homebuilder sentiment suggests buyer traffic is on the rise and this should lift housing activity in the new year.