Fed Cleared for December, Now We Look to 2017
|U.S. Review
Fed Cleared for December, Now We Look to 2017
- The final employment numbers and ISM surveys of 2016 are on the books, the way is cleared for the FOMC to raise rates next week and the focus turns to 2017. The key theme next year will be risk and reward in an aging business cycle. We presented our annual outlook for 2017 this week, refer to our website for a replay and the accompanying report.
- Data released this week mostly contributed to the stronger case for tighter monetary policy going forward. The ISM nonmanufacturing survey jumped, factory orders firmed slightly and JOLTS reiterated a tight labor market.
Global Review
ECB Maintains Accommodative Policy Stance
- At its policy meeting this week, the European Central Bank (ECB) dialed back its purchases of bonds from €80 billion/month to €60 billion/month (beginning in April). However, the ECB also extended its purchase program, which was set to expire in March 2017, through next December. Most analysts viewed the news as dovish, on balance.
- As long as inflation remains well below the ECB’s target, monetary policy in the Eurozone will remain accommodative. It seems likely that the euro will weaken further vis-à-vis the U.S. dollar next year.
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