Wall Street is still debating whether this bear market rally is over. With the exception of an inflation-fueled ISM Services index, it should be relatively on the data front until Friday’s one-two punch of PPI and the University of Michigan report.
Many traders are wondering if next week’s Fed decision will be the last one with a rate hike. Fed fund futures forecast a 50bps rise on December 14thTh The February 1stst It is still a toss up between a 25-bp increase and one final half-point increment. The service sector of the economy will continue to grow and inflation will be more stubborn. There are still high risks that the Fed will need to do more and this is why the economy must go into recession. This next recession however won’t be rescued by quick Fed easing or a fiscal response as that will fuel inflation risks.
US Data
Unexpectedly, ISM’s services index improved in November. However, prices paid were slightly lower. This could suggest that wage pressures are likely to remain high. The headline index came in at 56.6, higher than the 53.3 estimate, and prices declined from 70.7 – 70.0. The…
