This week, several key central banks are holding monetary policy meetings. The U.S. Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BOE) and Swiss National Bank are all providing their last policy guidance of the year.
Given the upturn in U.S. growth and strong employment conditions, the Fed is expected to raise interest rates by 25 basis points to 1.5%, marking its third increase in 2017. No significant changes are expected from the other central banks, but I will be watching for any commentary from the BOE on the continuing Brexit negotiations, and an update from the ECB on its bond buying program.
The Consumer Price Index (CPI) will also be released this week and the expectation is for a 0.2% increase in the overall and core CPI. Look for the bond market to react sharply to any reading higher than the consensus expectations.
On Friday, markets have to navigate a quadruple witching, which is the expiration of stock options, single stock options, index futures and stock futures. I anticipate high trading volumes and some increased volatility on Friday.
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