After being beaten back by rising inflation concerns, the S&P 500 (Index: SPX) rebounded to reach a new record high closing value of 4,704.54 on Thursday, 18 November 2021, but retreated below that level to end the week at 4,697.96.
From the perspective of the alternative futures spaghetti forecast chart, the trajectory of the S&P 500 is riding just within the upper end of the redzone forecast range.
We suspect that investors are refocusing their forward-looking attention on 2022-Q2 since the Federal Reserve is now expected to initiate a new round of Federal Funds Rate hikes to address the persistent inflation that has developed since January 2021. The CME Group's FedWatch Tool is anticipating two, maybe three rate hikes in 2022 for the Federal Funds Rate set by the U.S. Federal Reserve. The FedWatch Tool predicts a greater than 50% probability for at least two quarter point rate hikes, the first in June 2022 and the second in September 2022, but is now giving just under a 50% probability of a third quarter point rate hike in December 2022.
Here are the market moving headlines from the third week of November 2021:
- Monday, 15 November 2021
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- Signs and portents for the U.S. economy:
- Oil settles mixed on questions over crude supply, demand, strong dollar
- Biden, needing a boost, to sign $1 trillion infrastructure bill
- Most dovish Fed minion starting to expect 'transitory' inflation will linger:
- Mixed economic signs in China:
- China industrial output, retail sales accelerate but property clouds outlook
- China property hit by rare convergence of demand, supply declines
- Bigger inflation developing in Japan:
- ECB minion really wants to keep emergency stimulus measures going, willing to disregard market messages:
- Wall Street ends little changed as rising yields weigh on tech
- Tuesday, 16 November 2021
-
- Signs and portents for the U.S. economy:
- U.S. import prices surge in October on petroleum, food
- U.S. manufacturing output races to 2-1/2-year high
- Oil settles mixed on tight inventories, demand worries
- U.S. retail sales surge as Americans kick off holiday shopping, brighten economic outlook
- Fed minions beg for more time to act on inflation:
- Bigger trouble developing in China:
- ECB minions may be creating a problem for the Euro:
- Retail boost helps lift S&P 500
- Wednesday, 17 November 2021
-
- Signs and portents for the U.S. economy:
- U.S. homebuilding drops, construction backlog surges as shortages worsen
- Inflation, monetary tightening could heighten systemic risks -U.S. Treasury research office
- Fed minions starting to think inflation may be a problem:
- Fed officials say high inflation weighing on consumers and needs to be controlled
- Fed's inflation debate heats up as Biden nears Fed chair pick
- Fed's Daly: next step for Fed is forward guidance
- NY Fed's Williams says Treasury market needs to be shored up for next big shock
- Bigger inflation developing in Eurozone, UK, Canada:
- Euro zone Oct inflation confirmed at 4.1% y/y on energy spike
- UK inflation leaps to 10-year high, bolstering rate hike bets
- Canada's annual inflation rate matches 18-year high, set to keep rising
- ECB minions thinking they may have to deal with a housing bubble in addition to inflation:
- ECB sees rising risk that housing bubble will burst
- ECB must be attentive and vigilant on inflation: de Guindos
- ECB must be ready to act if inflation proves more durable: Schnabel
- Wall Street down as retailers stoke inflation fears
- Thursday, 18 November 2021
-
- Signs and portents for the U.S. economy:
- U.S. economy regaining speed as unemployment claims fall; manufacturing surges
- Biden's $1.75 trillion bill is not fully paid for, Congressional Budget Office says
- Oil hovers above six-week low as China readies crude reserve release
- Fed minions moving up plan to hike rates, one focused on other issues:
- Fed policymakers start penciling in earlier U.S. rate hikes
- Fed's Bostic: could start normalizing interest rates next summer
- Fed to hike in Q4 next year; inflation to remain above target until 2024: Reuters poll
- Fed's Daly says dependent care is essential to supporting work
- Bigger stimulus developing in Japan:
- ECB minion hoping inflation will go away:
- S&P, Nasdaq end at record peaks on strong earnings
- Friday, 19 November 2021
-
- Signs and portents for the U.S. economy:
- U.S. Thanksgiving dinner cost jumps with inflation on the menu, though deals remain
- Oil dives 3% to below $80/bbl on resurgent pandemic in Europe
- As Fed contemplates a move, Democratic states lag furthest in jobs recovery
- Fed minions starting to think they need to taper faster to stop inflation, maybe shouldn't coordinate policies with other central banks:
- As inflation surges, Fed to debate faster taper, earlier rate hikes
- Fed policymakers to debate a faster end to bond-buying
- Fed's Waller favors doubling speed of bond taper in January, be done by April
- Fed's Clarida: global central banks should not coordinate policy
- Bigger trouble developing in Eurozone:
- Central bank minions hiking rates to fight inflation, ECB minions expecting inflation:
- New Zealand central bank on a hiking spree as economic climate gets hotter
- ECB's Weidmann says inflation might stay above 2% for some time
- Nasdaq closes above 16,000 for the first time; Dow down again
We're shifting gears for the rest of the week with our annual week-long celebration of Thanksgiving, starting with a look at the inflation in the cost of a traditional Thanksgiving turkey dinner for 2021.
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