Weekly Reports | Sep 13 2013
For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.
By Greg Peel
Wednesday night. Assuming no turn for the worst regarding Syria, this will be the only night that matters next week. History was made when the Fed introduced QE in 2009 and history will potentially be made on Wednesday night when the Fed finally signals the beginning of the end of QE. At this stage, markets on average are assuming this will be the case.
Given next week’s FOMC meeting will also be one of the four per year the chairman follows with a press conference, clarification on tapering is pretty much a given. It may be that Bernanke announces tapering will start later in the year, but the market is assuming it will start right away, albeit incrementally. A cut to US$75bn from US$85bn per month is the popular expectation.
How will Wall Street react? The suggestion is that as long as the news is not a lot different in timing or quantum than that offered above, Wall Street should largely take tapering in its stride. There has been enough lead-in time to reprice for a new shift in policy. But never say never until the dust has settled. Last night’s plunge in gold suggests some markets remain a tad jumpy.
The data flow will also pick up next week in the US, with releases including industrial production, housing starts, sentiment and existing sales, the CPI, and the Empire State and Philly Fed manufacturing indices. Friday is quadruple witching.
The Fed meeting will steal the spotlight but Europe will also be counting down to the German federal election on the Sunday. In this case the incumbent is expected to hang on, but were Merkel somehow to be toppled the eurozone would be thrown into disarray.
It’s a quiet week economically in Australia with the releases of the minutes of the last RBA meeting on Tuesday the highlight. Australia will also see an index futures and options quarterly expiry on the Thursday.
Chinese markets will be closed on Thursday and Friday.
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