-Mixed signals from the U.S. industrial sector
Data releases, which dominated the U.S. economic agenda last week, drew a mixed picture of the country’s manufacturing sector.
The Federal Reserve reported on Friday that industrial production increased by 0.6 percent in November, marking the fastest monthly increase in the last three months. The market forecasted a 0.3 percent increase. The larger than expected growth was a result of a sharp increase in mining and output.
Nonetheless, manufacturing output was flat in November and October’s gain of 0.1 percent was revised to a fall of 0.1 percent. The weak trend suggests the slowdown in global growth has started to create headwinds for the sector.
On Friday, IHS Markit announced that manufacturing PMI decreased by 1.4 percentage points to 53.9 in December, the lowest level in the last 13 months.
- Inflation ends seven-month upward trend
According to official figures released mid-week, the Consumer Price Index (CPI) remained stable, in line with expectations in November. This ended an upward trend that lasted for seven months, while annual CPI declined from 2.5 percent to 2.2 percent.
The core CPI, which did not include variable energy and food prices, increased by 0.2 percent monthly and 2.2 percent year on year, in line with expectations.
- Canadian judge grants bail to Huawei CFO
A Canadian judge’s decision to grant bail to Chinese tech giant Huawei’s chief financial officer Meng Wanzhou was another important development last week.
At the request of American authorities, she was arrested in a Vancouver airport on Dec. 1 while changing planes en route to Mexico.
U.S. authorities alleged that Meng deceived American banks and other financial institutions to circumvent U.S. sanctions by lying about Skycom, a Huawei subsidiary in Hong Kong.
After being held at a Canadian jail for 10 days, she now waits to find out if she will be extradited to the U.S. to face fraud charges
- Fed’s last meeting and rate hike this year
The last meeting of the Federal Open Market Committee (FOMC) meeting comes at the forefront of the U.S. economic agenda next week.
The bank is expected to make this year's fourth and final rate increase which will be revealed at a press conference by Fed Chair Jerome Powell following the meeting.
Markets will focus on whether Powell will repeat his recent remarks about interest rates being “just below” the estimates of neutral rates, the level that keeps the economy balanced.
Investors took his comments as a sign that the Fed may slow down the pace of interest rate hikes or even take a pause in 2019.
On the other hand, some analysts claimed Powell's remarks were misunderstood by the markets, which ended last week with their largest gains in eight months.
For this reason, Powell's press conference may play a crucial role in reducing the uncertainty surrounding the Fed's monetary policy next year.
In addition, the growth and inflation data to be announced on Friday are important agenda items of the week.