Noreen Burke

Investing.com — Investors will be paying close attention to Wednesday’s Federal Reserve meeting minutes for fresh insights into the impact of soaring inflation on the future path of interest rates. Markets are also awaiting an announcement from President Joe Biden on his pick to lead the U.S. central bank, with a possible decision expected ahead of Thursday’s Thanksgiving holiday. The U.S. will release a lot of economic data Wednesday before the holiday. PMI data will come from the UK, the U.S., and other countries. This data will show the effect of supply chain issues on business activity and how inflation affects it. Black Friday is the first holiday shopping day amid fears that shoppers may tighten their belts. Here’s what you need to know to start your week.

1. Federal minutes

The Fed will publish Wednesday the minutes from November’s meeting. These are the decisions of policymakers who decided that the U.S. economic was strong enough to reduce its Pandemic-era asset purchasing program. It was put in place in order to support the recovery.

Inflation continues to rise and jobs have increased. Fed Vice Chair Richard Clarida called last week to talk about a quick taper, which would position the Fed for higher rates sooner.

Charles Evans of Chicago Fed, a well-known policy dove who said last Thursday that he’s “more open-minded than six months ago” about raising interest rates in the next year. Raphael Bostic of Atlanta Federal Reserve has indicated support for a rate increase mid-2022.

Following its mid-December meeting, the Fed will release new quarterly forecasts. This may allow policymakers to get a better idea of what has changed.

2. Biden’s Fed pick

According to the White House, President Joe Biden is likely to decide by Thanksgiving whether incumbent Fed Chair Jerome Powell will be retained or promoted to his current Fed Governor Lael Mindard.

The announcement is expected to lead to volatility on the stock market, especially if Brainard gets chosen.

Trump appointed Powell in 2018, when his term was due to expire in February 2018. Progressive Democrats favor Brainard who is on the Fed board from 2014 and is considered more dovish than Powell.

Markets may re-pricize the time of future rate increases if Brainard is elected, and the prospect of longer rates being lower could cause a decline in U.S. Treasuries due to higher inflation expectations.

3. U.S. data dump

The U.S. is to release a string of economic data on Wednesday before markets close for Thursday’s holiday. The highlight will be figures on personal income and spending, which includes the core PCE price index, rumored to be the Fed’s favored inflation gauge.

This economic calendar includes revised data for third quarter GDP, first jobless claims and durable goods orders. It also contains consumer sentiment, new home sales, and updated data about initial jobless claims.

On Monday and Tuesday respectively, reports on the existing home sales as well as November PMI data will be available. These are expected to only show a slight improvement.

4. PMI

The November PMI data for the U.S. are likely to indicate a slight uptick in business activity. However, similar surveys from Europe and the UK will reveal that there is a slowing in activity in the services and manufacturing sectors.

Inflation is being fueled by rising infection rates in Europe. This has been compounded with a worldwide supply chain crunch.

Although the European Central Bank is under pressure to reduce its loose monetary policy in order to compensate the impact on households’ spending, Christine Lagarde, President of the ECB, has resisted the call, arguing that tightening now would be detrimental to the recovery.

The Bank of England appears to be the next major central bank to increase rates after the outbreak of the pandemic. Investors and economists are expecting an interest rate rise at its December 16 meeting.

5. Black Friday

With high inflation and shortages of supply, Friday marks the start of holiday shopping.

While there have been concerns about inflation impacting consumer spending, the October sales surge indicated that consumers started to shop early in order to avoid shortages. Positive signs have been seen for holiday shopping due to high third quarter retail earnings.

Jessica Bemer, Easterly Investment Partners portfolio manager, told Reuters that one trend out of Q3 earnings was the resounding strength in the U.S. consumer.

Retailers have been referring to the customer returning to the shop, enjoying their shopping experience and getting ready for Christmas all week. This is a good idea, but earnings season really confirmed it.

–This report was contributed by Reuters