Thanksgiving Week Ahead: Two Key Tests for the U.S. Markets
As Thanksgiving approaches, the U.S. financial markets will experience a short trading week: both U.S. stocks and bonds will close entirely on Thursday, and trading will end early on Friday.
Despite the shortened schedule, the week is unlikely to be quiet. Two significant events could shake up the markets: the release of the Federal Reserve’s November meeting minutes on Tuesday and the Fed’s preferred inflation measure, the PCE Price Index, on Wednesday. Analysts anticipate the data will reveal persistent inflationary pressures, reinforcing the Fed’s cautious stance on future rate cuts.
Key Economic Data to Watch
Economists project that the October PCE Price Index will rise 2.3% year-over-year, up from 2.1% in September. The core PCE Price Index, excluding food and energy, is expected to jump 2.8% — marking the highest increase since April. The data may also reflect strong household spending and steady income growth, with personal spending estimated to grow by 0.4% and income by 0.3% month-over-month.
Although the Fed will receive another inflation report (November CPI) before its December meeting, this week’s PCE data will be its last key metric. Concerns about rising inflation under a new political landscape, coupled with ongoing trade and fiscal policy shifts, have heightened market uncertainty.
Fed’s Rate Expectations in Focus
The market’s expectations for a rate cut have diminished. According to the CME FedWatch Tool, traders now assign a nearly equal probability to the Fed holding rates steady versus cutting by 25 basis points next month.
The Fed's November meeting minutes, released Tuesday, will also attract attention. While the recent 25-basis-point rate cut aligned with market expectations, insights into the Fed's views on inflation, economic outlook, and potential future actions will be closely analyzed.
Bond Market Trends
After months of sell-offs, U.S. Treasury prices showed signs of stabilizing last week. The 10-year Treasury yield, often called the "global anchor for asset pricing," dropped slightly, ending Friday at 4.4%. Analysts from PIMCO and TwentyFour Asset Management highlight the current yield environment as increasingly attractive for investors seeking stability and higher returns.
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Disclaimer This post contains forward-looking statements based on available information and assumptions at the time of publication. These statements are subject to risks and uncertainties that may cause actual outcomes to differ materially. Vatee does not guarantee the accuracy, reliability, or completeness of the information provided.
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This analysis reflects the author's views and is for informational purposes only. It does not constitute investment advice.