3 Numbers to Watch: BoE report, US retail sales, Fed minutes
Wednesday has room to be the week’s unofficial surprise day, with the Bank of England (BoE) releasing its quarterly inflation report, US October Retail Sales and the Federal Reserve's minutes from the Federal Open Market Committee (FOMC) meeting on October 23-24.
UK Bank of England Inflation Report (10:30 GMT) has the potential to be the biggest market mover today. The report includes the economic analysis and inflation outlook for the next two years that are used by the BoE’s Monetary Policy Committee to set monetary policy. The report is published quarterly, and given the amount of quantitative easing (QE), zero interest-rate policy (ZIRP), the Olympic-boosted GDP numbers and the latest news that according to the BoE’s own estimates, QE effectiveness has been wearing quite thin as of late, there is plenty of uncertainty on the future monetary policy. Governor King will speak immediately after the report's release. See the BoE’s website for the Inflation Report and Governor King’s Speech.
US October Retail Sales (13:30 GMT) headline figure is expected to be around -0.1-0.2 percent (prev. +1.1%) and the core excluding autos and gas to show an increase of +0.3 percent (prev +0.9%). As the October numbers are affected by the hurricane Sandy, it is disputed how much value the numbers will have.
US FED FOMC Oct 23-24 Minutes (19:00 GMT) will probably have no big surprises, as the policy of “QE to infinity” is in my opinion well-defined as it is. Given the market’s recent low risk appetite and nervousness regarding Europe, any signs that the dissenting voices are hushed and in minority, and Evans' rule is not even near could be interpreted as positives. Given the European uncertainties and Sandy, I expect dovish voices have set the tone of the meeting.
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