The Week Ahead

It's likely to be a lively week ahead for markets as we start to gather more information about the Omicron variant of COVID-19. The initial market reaction was certainly not positive, with markets suffering there worst declines in months on Friday (and that was on a short US trading day with relatively low volume!). Obviously, the highlight of the week will be payrolls... fear not I will be providing a primer. 

In weekend news, Omicron dominates, and in the UK... it seems like masks are back, though hopefully not for good (guess the theme of today's non-sequitur). 

But this of course will still only be a single part of the story, the week ahead is awash with Central Bank speakers from the Fed and the ECB, before they will enter the blackout periods in the run up to their meetings later in the month. Here's the December major central bank calendar. The Fed's definitely going to be the one to Rule The World of markets though this month. Are they going to increase the pace of taper? With Omicron I see this as basically a probability zero, but I've been wrong before. 

Yes... there are some busy weeks ahead (I better start writing the next Week Aheads in advance...). But all that is in the future, for now:

Highlights for this week: 

Lagarde speaks Monday... I've been pushing back on the excitement of ECB speeches for a while. They're dovish, expect a lot of rhetoric on the threats from new virus variants, and a dovish tone to be struck - wouldn't be surprised at all to see some EURUSD weakness tomorrow. 

Powell speaks tomorrow 9pm our time. Lots of chitchat from the Fed, don't expect major changes from Powell but no doubt will be some attempt to shape the market view for the meeting in a couple of weeks. Powell also speaking Tuesday in testimony before Congress - this is a relic of the CARES act, but worth watching to see the view on the outlook. 

Yellen also speaks tomorrow and the topic of focus is likely to come back to that dreaded debt-ceiling. Wow, that came around fast, but we're going to have to have a little Patience in order to get through this one. With this coming around, there is the usual mumbo jumbo articles on the web about changing the rules, but let's be real, the Democrats don't have the votes. There's a very interesting article from The Atlantic on the brinksmanship of the debt ceiling... highly recommend reading. 

Starting to think Hamilton should've been my non-sequitur :) 

Core inflation data from Europe on Tuesday. Consensus for 2.3%, but I'm not convinced any number will seriously shift the European narrative. End of the day, oil tumbled 10% on Friday as well so a big contributor to EU inflation pressure has at least partly abated very recently (obviously this won't be included in the October print, but worth bearing in mind). 

OPEC meets on Thursday. With the slump in crude on Friday in what definitely wasn't oils Greatest Day, and uncertain demand outlook, the planned production increase of 400k per month is probably going to be put on hold. 

PAYROLLS FRIDAY!! Get Ready for It. This is the key moment of the week. Payrolls will determine direction. Remember last time, a beat on payrolls was actually seen as disinflationary!! This was because it showed an improvement in supply. I suspect a similar thing to happen this time around, especially if we can see a big beat. I will publish a full primer of this on Thursday. 

Non-Sequitir: 

OK this week's artist was ridiculously easy. No prizes for guessing Take That. No question they've produced some great songs... well 28 top 40 songs to be precise. 

In 2011, they set the record for the fastest selling tour tickets in history, and this was only beating their own record!