The Week Ahead: DELL and CRWD Earnings; Canada GDP Data

In US, interest rate expectations will return to the spotlight this week with crucial inflation figures and the release of Federal Reserve meeting minutes before Thanksgiving, as investors conclude a significant month for the markets following the election of President-elect Donald Trump.

On Tuesday, the Federal Reserve will publish the minutes from the November session of the Federal Open Market Committee (FOMC). This document will detail the discussions held by committee members during their meeting on November 6-7, when they decided to reduce interest rates by a quarter percentage point. The minutes could also provide clues about the future direction of the Fed's interest rate reduction strategy.

The October personal consumption expenditure (PCE) price index, scheduled for release on Wednesday, could undermine the already fading hopes for a rate decrease in December if it exceeds expectations. This would also heighten concerns—reignited following recent data on consumer and producer prices—that reaching the central bank's 2% inflation goal could prove to be the toughest stretch. Economists anticipate the PCE might indicate persistent inflation. The inflation rate is projected to rise 0.2% month-over-month and 2.3% year-over-year, based on FactSet consensus estimates. This would be a slight increase from 0.18% and 2.1% in the previous month.

Core inflation, which omits the erratic food and energy sectors, is predicted to rise by 0.3% monthly and 2.8% annually, up from 0.25% and 2.7% previously. For investors, the key will be whether the stock market can handle any surge in the data and any shifts in expectations for rate cuts, particularly during a week shortened by the holiday, which could result in reduced trading volumes and increased market volatility towards the end of November. U.S. markets will be closed on Thursday for Thanksgiving and will also close early at 1 p.m. ET on Friday.

In Canada, the GDP figures are set to be released this Friday. RBC anticipates a modest uptick in Canada's GDP growth to 0.2% in September, following a stable August. This brings the Q3 annualized growth to 1%, slightly below the Bank of Canada's 1.5% forecast and significantly lower than the 2.1% increase observed in Q2. Consumer spending likely rose in Q3, evidenced by a 5% annualized boost in retail sales, although a reduction in equipment imports hints at a decline in business investment after a robust Q2. Residential investment appears to have increased for the first time in four quarters, driven by a slight rise in home resales during August and September. The anticipated 0.2% GDP growth in September is less than Statistics Canada's 0.3% preliminary estimate, partly due to a recovery in rail transportation post-August disruptions. While wholesale and retail sales volumes experienced growth, manufacturing output likely decreased, and hours worked dropped 0.4% in September. Crucially, the Q3 GDP increase will not avert another decline in real per capita activity, marking the sixth consecutive quarter of this trend. The sluggish growth environment and generally easing inflation pressures underpin RBC's base-case projection of a 50 basis point rate cut by the Bank of Canada in December.

Besides, the Canadian September SEPH data on job openings will be scrutinized for indications of further weakening in the labor market. Job openings have been on the decline, and RBC anticipates a continued slowdown in wage growth.