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The changing of the guard at the Fed will be a big focus for investors in the week ahead.
Fed governor Jerome Powell, selected by President Donald Trump as the next Fed chair, appears before the Senate Banking Committee Tuesday for his confirmation hearing and should provide some insight into how he plans to lead the Fed. The next day, Fed Chair Janet Yellen testifies on the economy on Capitol Hill, before the Joint Economic Committee.
"I don't think people expect him to be much different than Yellen," said Peter Boockvar, chief market analyst at Lindsey Group. "I'm curious as to what he'll say about QE [quantitative easing] and whether it's a tool in the future. The question is will he be his own man or a Yellen look-alike?"
Powell is widely expected to sound close to Yellen on monetary policy, but perhaps looser when it comes to banking regulation. There are a number of other Fed speakers, including New York Fed President William Dudley, who also is expected to exit his role next year.
"None of the news this week is likely to alter the high probability of a Fed rate hike in December, but market participants are still, in my view, dragging their heels on pricing in a more realistic scenario for the Fed in 2018 and beyond," according to Stephen Stanley, chief economist at Amherst Pierpont. Stanley, in a note, said the fed funds futures are pricing in just three interest rate hikes between now and the end of 2019, while the Fed forecasts six and he expects eight.
Markets will be hyper-focused on whatever Powell says about policy but particularly what he may say about inflation, after the minutes of the Fed's last meeting pointed to conflicting views in the Fed about why inflation is low and what might be done about it.
The minutes of the Nov. 1 meeting also said a "couple" of members suggested the Fed tweak the way it approaches inflation, by moving away from its 2 percent goal and toward a "gradually rising path" in prices instead.
The dollar weakened on the minutes and was trading lower on Friday.
Besides the Fed speakers, there is also personal consumption and expenditure data on Thursday, and that includes an inflation index favored by the Fed over CPI or other measures. The Fed's beige book on the economy is released Wednesday afternoon, while monthly vehicle sales and ISM data are released Friday.
Stock market investors will be looking for early returns on the start of the holiday shopping season, and the results of the Cyber Monday shopping day.
The S&P retail sector was down about a half percent in the past week, as the stocks of many brick-and-mortar chains were volatile. Amazon, meanwhile, hit a record high Friday and gained nearly 5 percent for the week. Online shoppers had already spent 18 percent more than last year's Black Friday by 10 a.m. ET Friday.
The and Nasdaq closed at record highs Friday, but the Dow finished just below its record, at 23,557, up 0.9 percent for the week. The S&P 500 ended at 2,602, up 0.9 percent, and the Nasdaq was up 1.6 percent for the week, closing at 6,889 Friday.
In the Treasury market, a yield-flattening trade continued, with the yields on the short end getting closer to yields of longer-dated securities. In the stock market, traders watched the flattening warily, as it is sometimes seen as a sign of a weaker economy ahead.
"The big trade of the last few weeks has been the curve flattening, [5-year] and [30-year] in particular, and I think that will be of particular interest, as we go into month end," said Ian Lyngen, head of U.S. rate strategy at BMO. He said the trade could continue as investors buy longer-dated securities to rebalance portfolios at month end.
Energy markets will be focused on the OPEC meeting in Vienna Thursday, with analysts expecting a nine-month extension of the production agreement between Russia and OPEC. But the terms were so far unclear, as Russian companies sought a shorter extension.
What to Watch
9:45 a.m. Services PMI
10:00 a.m. New home sales
10:30 a.m. Dallas Fed manufacturing
6:30 p.m. Minneapolis Fed President Neel Kashkari
7:00 p.m. New York Fed President William Dudley
8:30 a.m. Advanced economic indicators
9:00 a.m. S&P/Case Shiller home prices
9:00 a.m. FHFA home prices
9:15 a.m. New York Fed's Dudley
10:00 a.m. Consumer confidence
10:00 a.m. Jerome Powell Fed chair confirmation hearing before Senate Banking committee
10:15 a.m. Philadelphia Fed President Patrick Harker
10:30 a.m. Dallas Fed services
8:30 a.m. Real GDP Q3
8:30 a.m. New York Fed's Dudley
10:00 a.m. Fed Chair Janet Yellen testifies before Congress on the economy
10:00 a.m. Pending home sales
12:45 p.m. San Francisco Fed President John Williams
2:00 p.m. Beige book
8:30 a.m. Jobless claims
8:30 a.m. Personal income
9:45 a.m. Chicago PMI
1:00 p.m. Dallas Fed President Rob Kaplan
Monthly vehicle sales
9:05 a.m. St. Louis Fed President James Bullard
9:30 a.m. Dallas Fed's Kaplan
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM manufacturing
10:00 a.m. Construction spending
10:15 a.m. Philadelphia Fed President Patrick Harker