If December was a “live possibility” for a rate hike prior to the October jobs report, then today’s numbers may have just sealed the deal, after a staggering 271,000 jobs were added in the month and unemployment fell to 5%, the level that the Fed deems to be full employment. Ever since the October meeting, today’s jobs report was seen as one of two that could make or break the decision and based on the data, the decision suddenly looks pretty straight forward.
The Bank of England will be in the spotlight on Thursday as it announces its latest monetary policy decision, releases the minutes from its meeting including voting details, releases its inflation report and Governor Mark Carney and colleagues conduct a press conference. Investors will be hoping to get some much needed clarity on the position of the BoE given how cloudy its expectations have become since the last meeting.
U.S. economic data will be key between now and the middle of December after the Fed’s statement on Wednesday suggested that as long as we don’t see a deterioration in the labour market data and inflation expectations, it will look to raise rates in December. With that in mind, few economic indicators will be more important than those that we’ll see today, particularly on the inflation front.
After yesterday’s hawkish FOMC statement we should prepare for even more scrutiny of every U.S. economic release, starting with today’s GDP reading, as investors once again try to anticipate whether or not we’ll get a rate hike in December.
European markets are trading predominantly in negative territory at the start of the week, paring strong gains on Friday that followed a strong hint that the European Central Bank will ease in December and rate cuts from the People's Bank of China.
It’s been a good start to the European session on Friday, with the encouraging eurozone PMI readings compounding the bullish sentiment on the back of Mario Draghi’s monetary stimulus hint in yesterday’s press conference.