The end of the week is shaping up to be just as quiet as the rest of it, with mostly low level economic data being released and nothing really driving markets ahead of the mammoth week to come. European indices are trading slightly lower this morning while over in the US, futures are pointing to a relatively flat open with the S&P seen down 1 points, the Dow down 8 points and the Nasdaq unchanged.
This week we’ve seen a combination of low trading volumes and near record low volatility, with bank holiday’s in the US and Europe significantly reducing the number of market participants. This has not been helped by the lack of major economic events this week and even when we have had major releases, the response has been muted.
The only explanation for this is that traders are being very cautious ahead of a huge week to come, with a massive policy decision from the ECB and the US jobs report standing out as the events that could have a significant market impact.
As for today, there is a few pieces of data worth keeping an eye on, although based on events this week, the market reaction will be muted. The core personal consumption expenditure figure is the Fed’s preferred measure of inflation but at current levels it’s unlikely to affect policy decisions.
Personal income and spending is always worth following as it can give some clues about the sustainability of the recovery, which is going to be built on the appetite of the consumer. As long as income growth continues to equal or better spending, it would suggest a consumer driven recovery is on the right path. Also today we have the UoM consumer sentiment reading and we’ll hear from a few Fed members who may provide insight into the timing of the first rate hike, which is expected in the middle of next year.
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