<p style=““ class=“text-align-justify“>Timiraos has been a sort of Fed whisperer as of late, so it is something to follow in case his remarks or views have any juxtaposition with prevailing market sentiment. Think back to how markets used to follow Hilsenrath when it came to Fed commentary.</p><p style=““ class=“text-align-justify“>In any case, this is the latest by Timiraos and it makes for an argument that while the Fed could slow down their pace of tightening this month, policymakers could allude to higher rates next year – more than what investors are expecting now.</p><p style=““ class=“text-align-justify“>A 50 bps rate hike seems to be what policymakers are favouring next week and that is what markets are expecting already at the moment. However, the infamous dot plots is going to be a major focus point and Timiraos says that „elevated wage pressures could lead them (Fed) to continue lifting it (interest rates) to higher levels than investors currently expect“.</p><p style=““ class=“text-align-justify“>The September projections showed that most policymakers saw rates rising towards 4.50% and 5.00% next year but that ‚landing zone‘ could be lifted towards 4.75% to 5.25% in next week’s latest projections.</p><p style=““ class=“text-align-justify“>You can view the full report <a target=“_blank“ href=“https://www.wsj.com/articles/fed-could-pencil-in-higher-interest-rates-next-year-while-slowing-hikes-in-december-11670208857?mod=latest_headlines“ target=“_blank“ rel=“nofollow“>here</a> (may be gated).</p><p style=““ class=“text-align-justify“>In any case, the bond market reaction is the one to watch in my view and over the past few weeks, a less hawkish stance has seen rates fall considerably to reach near a critical juncture as noted <a target=“_blank“ href=“https://www.forexlive.com/news/the-bond-market-is-still-a-key-spot-to-watch-this-week-20221205/“ target=“_blank“ rel=“follow“>here</a>. If bond traders interpret the Fed’s outlook as one that is still leaning more towards the hawkish side, the dollar could yet catch a much needed break heading towards year-end; vice versa.</p>

This article was written by Justin Low at forexlive.com.

<ul><li>Haven’t reached the stage that we are confident inflation is under ccontrol</li><li>Anticipates that there will be further rates hikes next year</li></ul><p style=““ class=“text-align-justify“>That at least gives some idea of what to expect but on the balance of things, markets are arguably leaning towards a 50 bps move anyway at this juncture. The Fed may be the main focus next week but don’t forget about the ECB as well.</p>

This article was written by Justin Low at forexlive.com.

<ul><li>Prior +0.4%; revised to +0.8%</li><li>Retail sales -2.7% vs -2.6% y/y expected</li><li>Prior -0.6%; revised to 0.0%</li></ul><p style=““ class=“text-align-justify“>Euro area retail sales were weaker than anticipated in October but that comes after a bit of a positive revision for September. In any case, the dip continues to highlight weakening demand conditions – which has become more prevalent in Q4, suggesting that a recession is likely in the works.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>This adds to the earlier news and weekend measures <a target=“_blank“ href=“https://www.forexlive.com/news/china-reportedly-may-announce-more-supplementary-covid-measures-this-week-20221205/“ target=“_blank“ rel=“follow“>here</a>. After the lockdown protests in the week prior, it has been a big change of pace in China’s plans in dealing with the pandemic. I reckon in the bigger picture, the question is how will a major re-opening for China play into global inflation developments? That will be something to think about.</p>

This article was written by Justin Low at forexlive.com.