This week has seen a notable rebound across major stock indices in the United States, Europe, and the Asia-Pacific regionFollowing a dip in prices the previous week, international gold prices experienced strong gainsThe financial landscape remains charged with speculation as a number of Federal Reserve officials adopted a hawkish tone, further elevating global investors' interest in the Fed's future rate cut plans.
Next week is poised to be particularly significant, as the minutes from the Fed's November monetary policy meeting are set to be released alongside a key inflation indicator: the Personal Consumption Expenditures (PCE) price index for October, which the Fed closely monitors.
Strength in Major European and U.S
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Markets
Overseas stock indices largely rebounded this weekIn the U.Smarkets, the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 surged by 1.96%, 1.73%, and 1.68% respectivelyMeanwhile, European stocks enjoyed similar boosts, with the UK's FTSE 100 and Germany’s DAX indices increasing by 2.46% and 0.58%, respectively, although the French CAC 40 index saw a minor decline of 0.20%. In the Asia-Pacific region, the Nikkei 225 index faced a setback with a drop of 0.93%, while South Korea's KOSPI index rose significantly by 3.49%.
The comments from various Federal Reserve officials this week, which expressed a hawkish inclination, have cast doubts on the anticipated rate cuts in DecemberDuring a speech, Chicago Fed President Charles Evans indicated his support for further rate cuts while remaining open to a slower pace of action
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This suggests that the focus of the Fed officials may shift from whether to cut rates to the speed and magnitude of such cuts in the future.
Richmond Fed President Thomas Barkin remarked that current data show the economy is "doing quite well," implying that upcoming rate decisions will heavily rely on economic dataHe also stated that the Fed’s policy settings would likely approach neutral levels, making discussions on the pace of rate cuts more important.
According to the latest data from the Chicago Mercantile Exchange's "FedWatch," market expectations suggest that the Fed might lower rates in December, but the probability of maintaining the current rates is also rising; as of now, there is a 44.1% chance that the Fed will keep rates unchanged and a 55.9% likelihood of a 25 basis point cut.
In addition to discussions around rate cuts, the U.S
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government's debt situation is another crucial issue that investors need to keep an eye onA semiannual financial stability report released by the Federal Reserve indicated that the sustainability of U.Sgovernment debt poses the biggest risk to financial stability.
Gold Prices Rebound Above $2700
In conjunction with a general uptick in the stock market, gold prices also rebounded after experiencing a steep decline in the previous weekBoth international gold futures and spot prices recovered lost ground, with COMEX gold futures and London gold spot prices both seeing five consecutive days of gains, closing above the $2700 per ounce mark this week at $2718.20 and $2715.80 respectively, reflecting a weekly increase exceeding 5%.
Market analysts suggest that the recent escalation of global conflicts has reignited demand for gold as a safe-haven asset, supporting its continuous rally
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Previously, the decline in gold prices was primarily attributed to a strong U.Sdollar and concerns over possible fiscal tightening; however, in the current climate of persistent fiscal expansion and the looming threat of rising debt, gold’s recent correction may present a favorable reallocation opportunity.
Key Federal Reserve Events on the Horizon
For global investors, the actions of the Federal Reserve are likely to remain in sharp focus next weekThe release of two critical events on the same day may further impact market expectations regarding Fed rate cuts and their timing.
Firstly, the minutes from the Fed’s November monetary policy meeting will be published early on the morning of November 27, Beijing time
While there will be no rate changes this month, the minutes will contain important insights regarding inflation data, policy positions, and economic outlooks that will be closely scrutinized.
Secondly, on the evening of November 27, the U.Swill unveil the October Personal Consumption Expenditures (PCE) price index, which is paramount to the Fed’s considerationsThe most recent data disclosed indicated that the core PCE price index for the third quarter saw a year-on-year rise of 2.2%, slightly above market expectations.
Additionally, starting November 28, significant inflation data for other major economies, such as Germany’s CPI figures for November, will be releasedThese developments will provide further insights into the potential implications for rate cuts in the Eurozone come December.