The last full business week ahead of the two-week holiday season is looking to be a busy one with six of the largest central banks holding meetings, announcing monetary policy strategies and providing economic updates. The Bank of Canada kicks things off today with an announcement at 11:00 am EST followed by a speech from Governor Macklem at 11:30 am EST. Canada’s federal government and central bank are expected to announce an update on the nearly three-decade old mandate of using monetary policy tools to target a 1%-3% band for inflation (i.e. somewhere near 2%). Inflation has been running above this band for several months now so it’s unclear if any changes will be made or if a US-style employment component could be added.
The US Fed follows on Wednesday with its own decision where investors may find out if the US central bank is actually considering accelerating its new tapering program or not. FOMC member forecasts may also provide insight into when the US central bank is considering its first interest rate hike. The US 10-year treasury note yield has slipped back under 1.50%, suggesting investors aren’t expecting significant changes. Other central banks meeting later in the week include the ECB, Bank of England, Bank of Japan and the Swiss National Bank.
Several significant economic reports are also due this week, headlined by US and Chinese retail sales on Wednesday plus flash PMI reports, the first peek at December economic conditions, on Thursday. Inflation reports are also on the way from the US, UK, and Canada this week.
Earnings season is over but there are a few corporate developments of note. Technology stocks could be active today after the NASDAQ announced six additions/deletions to the NASDAQ 100 index starting next Monday, headlined by the additions of Airbnb and Palo Alto Networks*. Peloton is up 3.0% premarket after falling 5.4% on Friday as the company fights back against the negative publicity generated from a recent episode of the “Sex and the City” revival.
This morning finds US index futures slightly in the green between flat Dow futures and a 0.4% gain for NASDAQ futures as investors digest Friday’s US index gains of 0.6% to 0.9%. European markets are mixed with the Dax up 0.9% and the FTSE down 0.1%. The US Dollar is up a bit, gaining 0.3% against the Euro and the Loonie, and rising 0.2% against gold. Bitcoin is getting smashed again, falling 3.9% and dropping back under $50,000. Commodities are mixed today with natural gas jumping 3.3%, copper climbing 0.6% and WTI crude oil losing 0.7%.
*Palo Alto Networks is held in some portfolios managed by SIA Wealth Management.
