(The Day Ahead is an email and PDF publication that includes the day’s major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) Federal Open Market Committee begins a two-day meeting on interest rate policy. Federal Reserve Chair Janet Yellen has to decide not only on whether to raise rates for the first time in a decade, but also on how to assure markets on the likely path of future rate hikes. According to strategists polled by Reuters, a rate hike will create further volatility in the market, even if most investors have priced in a move for when the Fed ends its policy meeting.
U.S. consumer prices are expected to have remained unchanged in November, according to a Reuters survey of economists, as energy prices resumed their downward trend, offsetting increases in the cost of food and other goods. The consumer price index rose 0.2 percent in October. In the 12 months through November, the CPI is expected to have risen 0.4 percent. Excluding food and energy, the so-called core CPI is expected to have advanced 0.2 percent after a similar gain in October. Core CPI is seen rising 2.0 percent in the 12 months through November. (0830/1330) Separately, the NAHB/Wells Fargo Housing Market index is expected to have risen to 63 in December from 62 in November. (1000/1500)
Bank of Canada releases the semi-annual Financial System Review, which deals with the main risks to financial stability. This issue will also feature the reports “Residential Mortgage Securitization in Canada: A Review” and “Indebted Households and Potential Vulnerabilities for the Canadian Financial System: A Microdata Analysis”. Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a news conference after the release.
Canadian manufacturing sales are expected to have dropped by 0.5 percent in October compared with an unexpected fall of 1.5 percent in September.
Sweden’s central bank, which is scheduled to announce its rate decision, has slashed rates to record low negative-0.35 percent and announced an extensive quantitative easing program to push up the inflation against their 2 percent target. And for a while, it seemed that prices were rising steadily. Together with rising inflation expectations, a growth rate of almost 4 percent during the third quarter, the ECB underwhelming the market and the Swedish crown actually weaker after the ECB than before - forecasts for further easing by the Riksbank look wide of the mark. However, a negative surprise in November inflation could change the central bank’s mind.
The guidelines for Brazil’s 2016 budget, known as LDO, will probably be out to vote in Congress. Members of President Dilma Rousseff’s party have called for the reduction of a key budget goal, allowing more room for public spending as the government battles against a deep recession. Finance Minister Joaquim Levy strongly opposes the idea and has threatened to quit if it is approved, according to media reports last week. The current budget bill sets a primary surplus target equivalent to 0.7 percent of gross domestic product (GDP), a very ambitious goal for a country expected to record a deficit greater than 1 pct of GDP in 2015. Political turmoil related to recently-opened impeachment proceedings against Rousseff could postpone the vote.
Mexico’s upstream oil regulator CNH seeks to award 25 license contracts covering relatively small onshore oil and gas fields scattered across the country. The auction is aimed at attracting a new generation of start-up Mexican oil companies and marks the third phase of the so-called Round One tender, one of the first concrete steps in Mexico’s historic oil sector opening.
Economic growth in Peru is expected to have quickened slightly to 3.2 percent in October as surging copper production offset weak manufacturing and construction activity. After a sharp slowdown last year, growth in Peru continued to be dragged down by slumping public investment and weak prices for the country’s mineral exports. But a rebound in copper production at Antamina, one of Peru’s top mines, and rising output from Chinalco Mining Corp International’s Toromocho and HudBay Minerals Inc’s Constancia copper mines have supported a modest recovery in recent months.
LIVECHAT: FED FOCUS with Axel Merk, strategist and portfolio manager Axel Merk takes questions on the Federal Reserve, the U.S. economy and the dollar as U.S. central bank policymakers decide whether or not to end a near-zero interest rates regime nearly a decade old. (1000/1500) To join the Global Markets Forum, click here bit.ly/1kTxdKD (Compiled by Sourav Bose in Bengaluru; Editing by Kirti Pandey)