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Weekly Economic & Financial Commentary: Powell Hints at Earlier Taper, but Payroll Miss & Omicron Variant Loom Large

Summary

United States: Powell Hints at Earlier Taper, but Payroll Miss & Omicron Variant Loom Large

  • This week was bustling with economic news as tensions mounted surrounding the breakout of the Omicron variant. The changes in tone in Powell’s comments during his testimony before Congress have economists and markets on high alert for the December 15 FOMC meeting. Meanwhile, payrolls rose less than half of the consensus estimates, although participation rose and the unemployment rate fell to 4.2%. ISM surveys pointed to strength in manufacturing and services production, while consumer confidence dipped slightly and construction spending moderated.
  • Next week: Trade Balance (Tues), JOLTS (Wed), CPI (Fri)

International: Eurozone November CPI & Canada Q3 GDP Come in Hot

  • The Eurozone’s November CPI grew at a record pace of 4.9% year-over-year, while Canada’s Q3 GDP bounced back, rising 5.4% quarter-over-quarter (annualized). In China, the November manufacturing and services PMIs both came in slightly stronger than expectations, but the outlook remains uncertain amid COVID-related restrictions and a slowdown in the real estate sector.
  • Next week: Reserve Bank of India (Tues), Brazilian Central Bank (Wed), Bank of Canada (Wed)

Interest Rate Watch: Is the Fed Turning Hawkish?

  • Federal Reserve Chairman Jerome Powell got the attention of market participants this week, acknowledging that “it now appears that factors pushing inflation upward will linger well into next year.” The Fed Chairman also said that the Federal Open Market Committee (FOMC) may consider speeding up the pace of “tapering” of its asset purchases.

Credit Market Insights: A Recovery to Pre-Pandemic Levels in Household Credit

  • Credit card application rates have now risen to their pre-pandemic levels, indicating that consumers are returning to, or even exceeding, their level of household spending from before the pandemic.

Topic of the Week: Congress Faces a Jam-Packed December Schedule

  • On Thursday, Congress reached an eleventh-hour agreement on a continuing resolution (CR) that would once again avert a government shutdown for a few months. The CR agreed to this week is just the tip of the iceberg for Congress this December.

Full report here.

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