Investors will be reacting to a wide range of economic reports this week along with the minutes from the Federal Reserve’s October meeting for signs about the health of the economy which comes on the heels of U.S. stocks indexes pushing to all time highs last week after Janet’s Yellen confirmation hearing before the Senate Banking Committee where she defended the Fed’s commitment to maintain its monetary policies.
On Wednesday retail sales and existing home sales will reveal how strong homes sales held up in October in the midst of higher mortgage interest rates since the spring and uncertainty over government fiscal policies that extended over half of the month.
Also on Wednesday the Federal Reserve will release minutes from their October meeting (Oct. 29-30th) that is expected to give some further clarification about how Committee members in the Fed view the economy and approach the necessity for the central bank to maintain its $85 billion monthly quantitative easing program.
During Janet’s Yellen’s confirmation hearing last week, questions were raised about the efficacy of the Federal Reserve’s controversial quantitative easing program that is aimed at driving down interest rates and stimulating the economy.
After stating that the benefits of the Fed’s quantitative easing program exceed the costs, Yellen reminded Senate leaders that the objective of the Fed’s controversial quantitative easing program is to ensure a strong and robust recovery that will help to achieve full employment while keeping inflation under control.
“It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy should the economy falter are limited given that short-term interest rates are at zero. I believe it could be costly to withdraw accommodation or to fail to provide adequate accommodation” Yellen said.
In terms of when the Fed is set to withdraw accommodation, Yellen said as the recovery proceeds it will be appropriate to remove accommodation “when the time has come” and she cited the Fed’s inflation goal of 2 percent.
Later this week, the market will receive latest inflation data and manufacturing data from the Philly Fed.