Today is likely to be the busiest day of the month as we have two central bank decisions and a couple of top tier US data releases. After today, we will conclude with the FOMC rate decision next Wednesday and then we go into the Christmas holidays lull.
08:30 GMT - SNB Policy Decision
The market is pricing in a 57% probability of a 50 bps cut for the SNB. Inflation has been much lower than the central bank’s forecasts and the strength in the Swiss Franc didn’t help either. The new SNB’s Chairman Schlegel seems more resolute than his predecessor as he flagged negative rates if needed to dampen the appetite for the safe-haven franc. This is likely what pushed the market to see higher chances of a 50 bps cut today.
13:15 GMT/08:15 ET - ECB Policy Decision
The ECB is expected to cut interest rates by 25 bps bringing the policy rate to 3.00%. The market’s pricing has been very aggressive lately due to a series of weaker than expected economic releases, but the majority of ECB’s officials pushed back against a 50 bps cut in December. After this week’s cut, the market sees five more in 2025 which could turn out to be too much if things pick up next year.
13:30 GMT/08:30 ET - US November PPI
The US PPI Y/Y is expected at 2.6% vs. 2.4% prior, while the M/M measure is seen at 0.2% vs. 0.2% prior. The Core PPI Y/Y is expected at 3.2% vs. 3.1% prior, while the M/M figure is seen at 0.2% vs. 0.3% prior.
This report is unlikely to have much of an impact given that the US CPI yesterday sealed the 25 bps cut next week. It will give us a better estimate of the US Core PCE due at the end of the month though.
Even if we get an upside surprise, the market's pricing is likely to remain largely unchanged. If we get a downside surprise though, we should see more of what we saw yesterday with the USD getting sold and risk assets rallying.
13:30 GMT/08:30 ET - US Jobless Claims
The US Jobless Claims continues to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims continue to hover around the cycle highs.
This week Initial Claims are expected at 220K vs. 224K prior, while Continuing Claims are seen at 1875K vs. 1871K prior.
