Attack the Week (ATW)
December 17, 2023
The pre-Christmas period is a season brimming with unparalleled joy and a vibrant social calendar. It's the perfect time for reconnecting with friends, colleagues, and family. If you happen to walk around London town, you’d do well to find an empty pub or restaurant, especially during the week leading up to Christmas.
Every year, our family organises a Friday gentlemen’s lunch. It’s a blast, and it usually takes out the entire afternoon and evening. This year was no exception. As in any family tradition, there is a chain of command. The head of the family table is the most senior attending family member and is regarded as the “consigliere” of the hierarchy. That person can only be taken down by someone more senior, which only my soon-to-be 90-year-old father-in-law could accomplish. The rest is organised by voting in a boss whose only job really is to organise next year’s table and keep the gang informed via a Whatsapp group. This year, there was a bit of an oversight where a family member somehow did not receive the memo and, hence, didn’t attend. He disappeared from the WhatsApp group without having left. Any tech geeks out there, please enlighten me on how this is possible. As a result of this unfortunate mishap, the boss was voted out, and the search for new blood promptly started. After two rounds of voting, white smoke emerged, and the baton somehow ended up with me. A new era has begun. The prevailing regime has shifted, even if that literally has no meaning as we await next year.
Many are calling a regime shift following last week’s dovish FOMC meeting. To me, this is way too early to conclude. We saw some back peddling as the Fed’s Williams comments caused front-end rates to sell off. "Cuts are not the topic of discussion. The Committee doesn't have plans around that," said Williams in an interview last Friday. "I would point out that the median projection is for restraint being gradually dialled back. I think the market is reacting very strongly - maybe more strongly - than what we are showing." Williams is an important communicator and thought leader within the FOMC, so I would listen when he opines. Markets have gotten a bit ahead of themselves, as I opined in my post-FOMC thoughts, but Jay and their projections opened the door to a perceived regime shift. Let’s see whether there is going to be more messaging during the week.
BoJ is clearly the spotlight during the week. While speculation has grown about some policy shifts, broad consensus still expects no shift at this meeting. Japan CPI lands will also be on the market’s radar later in the week. Meanwhile, Canada's CPI, retail sales, GDP, and BoC Minutes will clearly put local assets on our radar. US core PCE is just one of many reports released for USD assets. UK CPI will be critical, while Norges Bank Governor Bache's speech and RBA Minutes will be analysed for any hawkish guidance.
Let’s now look at the week in more detail and glance through the most important charts that should guide us throughout the week.