Powell and PCE inflation could calm the market party next week
The Swiss stock market is back close to major resistance at 11,230 points, benefiting from a favorable seasonality for risky assets during the week of Thanksgiving and the Fed Minutes reinforcing the scenario of a slowdown in the tightening in December.
The SMI is approaching the resistance below which it retreated earlier this month, but also in August. Nonetheless, risks remain tilted to the downside as a recession in the global economy looks increasingly certain amid the further tightening of health restrictions in China, the energy crisis and tightening financial conditions across the world.
Risky assets could continue to rise in the coming sessions pending Jerome Powell’s speech on Wednesday November 30 and the publication of PCE inflation on Thursday December 1.
Given the clear easing of financial conditions since the last FOMC meeting earlier this month, the Fed Chairman could take advantage of his intervention at the Brookings Institute to toughen his tone.
As for PCE inflation, it could surprise on the upside given that the sharp drop in the CPI last month was mainly due to a drop in the medical component due to a revision of the benchmark which is not calculated similarly in the PCE index.
SMI daily price chart – key levels