November 3 has finally arrived, and with it, one of the most highly anticipated fundamental events of the second half of 2021: the Federal Reserve meeting that many suspected will mark the beginning of a period of much tighter monetary policy.
With inflation rates rising above 4%, considerably higher than the ideal level of 2%, the Fed has been under pressure to ease out of its own stimulus program in order to prevent the economy from overheating, even though the US labor market has not recovered at the same pace as inflation has risen.
Chairman Jerome Powell has promised that asset purchases will be phased out gradually and end by the middle of 2022, a timeline which suggested that the tapering needs to start in November at about $15 billion per month, or else the Fed will risk withdrawing too much too quickly, which may shock financial assets.
So far, the expectations of a stricter measure such as an interest rate hike have been much lower; one is not seen likely until 2023 or late 2022, at the earliest. But with today’s likely announcement of tapering plans, many hope to hear a more specific schedule for possible rate hikes as well.
In anticipation of the Federal Reserve’s meeting outcome, today all major US stock indices will trade slightly lower than yesterday (when they made new gains). Meanwhile, the earnings season continues, with Electronic Arts and Qualcomm reporting today.
The EA will be of special interest, after its rival Activision Blizzard failed to impress yesterday and postponed its two biggest games in development further.
Housing reseller Zillow is also a name to keep an eye on today, as the company’s stock has been crashing on the news that it purchased too much property which it now is struggling to flip and resell, since the housing market in 2021 has tightened compared to 2020.
Other notable data today included unemployment rates for October in Spain, Italy, and the eurozone as a whole, which were all in line with the forecasts.
There were slightly better Caixin PMIs from China today for October (composite and services).
In addition, the United Kingdom also delivered upbeat composite and services PMIs for the previous month.
