*Investors face a holiday-shortened this week that could see lighter trading volume.
*The highlight of the economic calendar looks be the release of the minutes of the last FOMC meeting.
*While that meeting took place before the release of the October CPI report, the market could see a jolt when hawkish tone of members is seen in black and white.
It will be a holiday-shortened trading week, but it will not be short on news events. The massive news event will come on Wednesday at 2 PM with the release of the November Fed minutes. These minutes will likely reverse the equity market's celebration following a lower-than-expected October CPI report, as the Fed has a different view and is already pushing back hard.
Since the release of that CPI report on November 10, Fed-speak has been crystal clear - slower rate hikes do not mean a lower terminal rate, and one better-than-expected CPI report isn't going to change the path of monetary policy. Ultimately, these speakers seem to think rates are going even higher.
The November FOMC statement indicated the likelihood of a slower pace of rate hikes coming, while the FOMC press conference indicated that the terminal rate was likely to be higher than previously expected in September. Since the FOMC meeting, a strong case has been laid out by many FOMC members for the overnight rate to head over 5% and potentially to go as high as 5.25% in 2023.
If this message of higher rates is correctly delivered in the FOMC minutes, then it seems more likely than not that the equity market rally since the October CPI report in mid-November should not only pause but reverse.
From tech side of analysis, 8&21 EMAs are already catching up with the price, and after Monday's trading session,the market gave an insideday pattern. It's likely that the market is trying to select direction, however, as mentioned at the very beginning, holiday-shortened trading week normally sees lighter trading volume, so even breakup or breakdown can not be legit. Therefore, wait for the Fed minutes is important.
*The highlight of the economic calendar looks be the release of the minutes of the last FOMC meeting.
*While that meeting took place before the release of the October CPI report, the market could see a jolt when hawkish tone of members is seen in black and white.
It will be a holiday-shortened trading week, but it will not be short on news events. The massive news event will come on Wednesday at 2 PM with the release of the November Fed minutes. These minutes will likely reverse the equity market's celebration following a lower-than-expected October CPI report, as the Fed has a different view and is already pushing back hard.
Since the release of that CPI report on November 10, Fed-speak has been crystal clear - slower rate hikes do not mean a lower terminal rate, and one better-than-expected CPI report isn't going to change the path of monetary policy. Ultimately, these speakers seem to think rates are going even higher.
The November FOMC statement indicated the likelihood of a slower pace of rate hikes coming, while the FOMC press conference indicated that the terminal rate was likely to be higher than previously expected in September. Since the FOMC meeting, a strong case has been laid out by many FOMC members for the overnight rate to head over 5% and potentially to go as high as 5.25% in 2023.
If this message of higher rates is correctly delivered in the FOMC minutes, then it seems more likely than not that the equity market rally since the October CPI report in mid-November should not only pause but reverse.
From tech side of analysis, 8&21 EMAs are already catching up with the price, and after Monday's trading session,the market gave an insideday pattern. It's likely that the market is trying to select direction, however, as mentioned at the very beginning, holiday-shortened trading week normally sees lighter trading volume, so even breakup or breakdown can not be legit. Therefore, wait for the Fed minutes is important.