Investors will be able to form conclusions on the future direction of interest rates by waiting for U.S. inflation data and remarks from multiple speakers form the Fed

Fed Speakers

As policymakers consider any more tightening in advance of their next meeting on December 12–13, investors will have the opportunity to hear from a number of Fed officials this week, including Governor Philip Jefferson, Governor Michael Barr, Governor John Williams, and Governor Austan Goolsbee.

Officials "are not confident" that interest rates are now high enough to win the war against inflation, according to remarks made by Fed Chair Jerome Powell last Thursday. Despite the Fed's desire to avoid adopting an excessively strict stance, Powell stated that "the biggest mistake we could make is really, to fail to get inflation under control."

The focus has been on benchmark Treasury yields, which have somewhat decreased from 16-year highs. Investors are evaluating whether rates have peaked and when the central bank may begin to reduce rates.

US Inflation Data

Investors are anticipating the release of the October U.S. consumer price data on Tuesday, which is expected to provide an update on the Fed's efforts to keep inflation from reaching multi-decade highs last year.

On a monthly basis, inflation is predicted to have increased by 0.1%. Despite an unexpected increase in rental costs, September's CPI increased by 0.4%, indicating a moderating of underlying inflation pressures.

The speculation of peak rates, which was stoked by October's employment data that indicated labour market conditions were improving, may be fanned by a more severe cooling.

Along with retail sales figures for October, which are predicted to enter negative territory following a run of strong monthly increases, the U.S. will also reveal producer price data.

US Government shutdown back on the table

If Congress in Washington does not pass a bill by Friday that would at least temporarily fund operations, there is a serious chance of a federal government shutdown.

Republicans were divided for most of 2023 over hardline demands for drastic budget cuts and policy riders, such as limits on abortion. Republican centrists, on the other hand, pushed for a more nonpartisan strategy that may garner Senate support.

In an attempt to prevent a partial government shutdown, U.S. House Speaker Mike Johnson introduced a Republican stopgap budget bill on Saturday. However, the unconventional idea was swiftly criticised by members of both parties.

Crude Oil

With a meeting in two weeks, Iraq expressed support for OPEC+'s oil curbs, and some speculators covered large short positions ahead of uncertainties this weekend, oil prices rose by roughly 2% on Friday.

Nevertheless, prices ended the week with 4% weekly losses—their third consecutive week of declines.

Amidst disappointing economic statistics from China, the U.S., and the U.K. last week, worries about the future of global demand outweighed worries about possible supply disruptions linked to the Middle East conflict.