Despite the House of Representatives passing tax legislation, that would lower corporate taxes to levels not seen since 1939, major stock indices and the greenback were on their way to end the week lower, at the time of this writing. The tax bill now moves to the Senate, with a majority of market participants doubtful if a tax overhaul will be passed this year, according to various polls.
Further, the Federal Reserve’s Donald Kaplan voiced concerns regarding the government’s debt-to-GDP ratio reaching potentially unsustainable levels, continued to exacerbate the risk-off sentiment. Both the yen and gold were edging higher by the end of the week as well. The treasury yield curve flattened, with 10-year yields a few basis points lower at about 2.343%.
Overseas, Chinese stocks took a beating on recent soft economic data, European healthcare and financial stocks followed suit on the back of lower earnings. The ECB’s president, Mario Draghi, also reiterated that the bank could continue its quantitative easing program beyond September 2018 last week, if inflation persists below the bank’s target rate of 2%.
This Week…
A short and relative quiet week, due to the Thanksgiving holiday in the U.S. Although SIFMA has not officially recommended an early close for Wednesday, November 22, most market participants will still take an unofficial early close to begin their Thanksgiving Day holidays. SIFMA has recommended a full market close for Thursday, November 23, in observance of Thanksgiving. SIFMA has also recommended an early close on Friday, November 24.
The data calendar takes a breather with only a handful of releases on this week’s docket. Highlights will include October Existing Home Sales (Tuesday), followed by October Durable Goods, November University of Michigan Sentiment, and the FOMC Minutes (all Wednesday). We’ll also get November PMI on Friday. Complete data schedule below:
This week’s Fed speak will be relatively quiet with Fed Chairwoman Janet Yellen scheduled to speak on a panel at NYU’s Stern Business School on Tuesday at 6 PM EST.
Overseas key economic data include: German PPI (Monday), Australian central bank minutes (Tuesday), GBP inflation report, German GDP (Thursday), German PMI, EUR PMI, GBP GDP, GBP business investment, ECB monetary policy meeting accounts, NZD trade data, JPY foreign investment data, Swiss industrial production (Friday) and German business climate data.
Central bank speakers overseas include ECB’s Draghi (Monday), Australia’s Gov. Lowe (Tuesday) and the Swiss National Bank Chairman Jordan (Thursday).
