Investors this week will be paying attention to an interest rate decision from the Federal Reserve on Wednesday followed by an October jobs report on Friday to gain a better understanding about the strength of the U.S economy and the labor market.
Most economists are not expecting the Federal Reserve will raise interest rates at the November policy meeting this week ahead of the U.S. presidential election on November 8th.
According to the CME’s Fed Watcher, there is just a 8.3 percent probability that policymakers at the Federal Reserve will decide to raise interest rates in November.
But December is an entirely different story.
The probability of a 0.25 percent interest rate hike at the Fed’s December meeting on December 14th jumps to 68 percent, according to the latest reading of CME’s Fed Watcher.
Last December policymakers at the Federal Reserve decided for the first time since June 2006 to raise interest rates with the federal funds, moving the federal funds from zero – 0.25 percent up by just 0.25 basis points to between 0.25 percent to 0.50 percent.
Policymakers at the Fed also projected 4 interest rate hikes for 2016.
So far, none of their projected rate hikes have materialized.
Last week, U.S. GDP for the 3rd quarter of 2016 came in at 2.9 percent in the advanced reading from the Bureau of Economic Analysis, beating the 2.5 percent consensus estimate from briefing.com.
The September U.S. jobs report revealed that 156,000 non-farm payroll jobs were added to the U.S. economy.
Thus far in 2016, job growth have averaged 178,000 per month, lower than the 229,000 in 2015.
Over the past 3 months, job gains have averaged 192,000 per month.
On Friday economists from briefing.com have a consensus estimate of 175,000 non-farm payroll jobs added in October while the unemployment rate is expected to drop slightly to 4.9 percent from 5.0 percent in September.
Other Important Economic Data This Week
On Monday Euro area GDP will be released for Q3 2016 with a preliminary reading.
On Tuesday the Bank of Japan will release their statement on monetary policy.
Besides paying attention to monetary policy from the Federal Reserve and Bank of Japan this week, investors will also watch more Q3 earnings reports from companies and also monitor the results of other economic data such as U.S. PCE inflation for September, the preferred inflation gauge for the Fed, which is due on Monday.
The ISM index for October is reported on Tuesday along with construction spending for September and auto/truck sales for October.
On Thursday, U.S. Factory orders for September will come into focus along with ISM Services for October.
Full U.S. Economic Calendar
Monday- U.S. PCE inflation (Sept), Chicago PMI
Tuesday- ISM Index (Oct), Construction Spending (Sept.), Auto/Truck Sales (Oct.)
Wednesday- ADP Employment (Oct.), FOMC rate decision, MBA Mortgage Index, Crude Inventories
Thursday- Factory Orders (Sept.), ISM Services (Oct.), Initial/Continuing Job Claims, Challenger Job Cuts, Natural Gas Inventories, Unit Labor Costs- Q3, Productivity- Q3, Unit Labor Costs -Q3.
Friday- Non-farm payroll report (Oct.)