The Week Ahead: MU, ACN, FDX Earnings; FOMC Decision and CA November CPI

In the U.S., the Federal Reserve is set to move forward with another quarter-point interest rate cut, though its forward guidance remains unclear. This uncertainty isn't due to a history of significant rate cuts, but rather stems from the Fed's cautious approach toward achieving the 2% PCE inflation target. There is some uncertainty about the necessity for substantial economic relief at this point. Projections for the core PCE and the federal funds rate could see slight increases for 2025. After the meeting, a modest 0.2% rise in the monthly core PCE price index is anticipated. Despite concerns from some quarters, shelter inflation is expected to ease, which could bring the federal funds rate towards a mid-3% range. However, unexpected inflationary pressures could lead to potential pauses in this trajectory. Additionally, retail sales excluding autos are likely to be somewhat lackluster, and housing starts continue to run below the desired trend, rounding out the major data releases.

In Canada, headline inflation may have experienced a slight increase in November, with core price pressures appearing temporarily stronger than their recent trend. Influences from other countries indicate that Taylor Swift's presence in Canada possibly contributed to higher inflation in sectors like hotels, restaurants, and airfares. This has been accounted for with a projected 0.3% seasonally adjusted rise in the CPI, excluding food and energy. Retail sales, especially on a per-capita basis, have been sluggish over the past two years. However, recent indicators suggest that lower interest rates are beginning to support a rebound in goods spending. A 0.7% rise in sales is expected for October, which may appear only slightly weaker when considering volume. With ample room for demand growth and opportunities for households to decrease their savings rate, a further modest increase in sales is anticipated in the advance estimate for November.