Economics Weekly by Lloyds TSB

The week will be dominated by the Mid-term elections and the FOMC meeting on Wednesday. Markets are expecting the Fed to announce upwards of $750bn of additional QE. Failure to do so will lead to unfavourable market shifts. Markets poised for action from the Fed…

The week will be dominated by the Mid-term elections and the FOMC meeting on Wednesday. Markets are expecting the Fed to announce upwards of $750bn of additional QE. Failure to do so will lead to unfavourable market shifts. Additionally, QE may not do a huge amount to help the economy in our view; as savers want to save and interest rates are already at rock bottom. But it should help to improve sentiment in the markets and keep down long term rates. Watch out for any changes in the Fed’s language around inflation and whether it thinks it has now done enough and how any QE will be implemented this time round. Data this week will focus on Friday’s employment numbers, where we look for a rise of nearly 90k in October, as the census-worker driven decline wears off. Meanwhile, the ISM surveys should hold up with price pressures remaining low.

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