Powell and PCE inflation may calm the market party next week
The Swiss stock market is back near major resistance at 11,230 points, benefiting from a favorable seasonality for risky assets in the week of Thanksgiving and the Fed minutes, reinforcing the scenario of a slowdown in tightening in December.
The SMI is approaching the resistance below which it pulled back earlier this month, but also in August. Nevertheless, risks remain on the downside as a recession in the global economy looks increasingly certain due to the further tightening of health restrictions in China, the energy crisis and tightening of financial conditions worldwide.
Risky assets may continue to rise in the coming sessions pending Jerome Powell’s speech on Wednesday, November 30 and the release 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 tighten the tone.
As for PCE inflation, it may surprise on the upside, as the sharp decline in CPI last month was primarily due to a decline in the medical component due to a revision of the benchmark, which is not calculated the same way in the PCE index.
SMI Daily Price Chart – Key Levels