It’s a big week for U.S. data with the release of the November jobs report on Friday, but market sentiment is more likely to be dictated by news about the timing of vaccine distribution and concerns about more aggressive measures to curb the spread of the virus after the Thanksgiving holiday. Investors will be closely watching testimony by Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin on the CARES Act in Washington. OPEC is expected to delay plans to step up oil output when it meets during the week. Meanwhile, euro zone inflation data is likely to cement expectations that the European Central Bank will ramp up stimulus measures at its next policy meeting. Here’s what you need to know to start your week.
- Vaccine timing
News this month of three promising coronavirus vaccine candidates has helped propel the Dow Jones Industrial Average over 30,000 and investors will be closely following plans for the initial rollout.
U.S. health authorities are to hold an emergency meeting on Tuesday to recommend that the Food and Drug Administration allow healthcare professionals and people in long-term care facilities to be the first two groups to get a coronavirus vaccine developed by Pfizer (NYSE:PFE) and German partner BioNTech, which is awaiting approval.
The announcement of the meeting indicates that the FDA may be close to authorizing distribution of the vaccine, at least for the most at risk groups.
The United States recorded its 12 millionth COVID-19 case on Nov. 21, and health experts have warned that travel for the Thanksgiving holiday will likely push case counts sharply higher.
- Nonfarm payrolls
Concerns that the steeply escalating numbers of new virus cases and more widespread containment measures have been undermining the recovery in the labor market mean that Friday’s November nonfarm payrolls figures will be closely watched.
The report is expected to show a seventh straight month of jobs gains, but the consensus forecast that only 500,000 jobs were added. The unemployment rate is expected to tick down to 6.8% from 6.9%, still well above the 4.5% rate in March, before much of the U.S. economy went into lockdown.
The economy added 638,000 new jobs in October, which was the smallest gain since the jobs recovery started in May.
The calendar also features the ISM manufacturing PMI on Tuesday and the ISM non-manufacturing PMI along with the weekly report on initial jobless claims on Thursday.
- Powell and Mnuchin faceoff
Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin are to testify before the Senate Banking Committee on Tuesday and again a day later before the House Financial Services Committee.
They will be discussing the CARES Act, under which Congress in March allocated $2 trillion in pandemic aid to the U.S. Treasury, much of which was set aside to support Fed lending programs.
Earlier this month Mnuchin unexpectedly requested that the Fed return unused funds to the Treasury and declined to extend Fed lending programs the central bank said were a critical backstop for the economy, which is experiencing the worst downturn in a century.
The move has put the outgoing Trump administration at odds with the Fed and will add to economic stresses as President-elect Joe Biden prepares to take office.
- OPEC+ meeting
OPEC and its allies, including Russia, a group known as OPEC+ had been expected to increase oil output by 2 million barrels per day from January to ease the record supply cuts that were implemented amid a price slump earlier this year.
But when OPEC+ meets on Nov. 30-Dec. 1, energy analysts say it is now expected to delay those plans for at least three months.
While crude oil prices have recovered to eight-month highs near the $50 a barrel level, continued restrictions on travel because of the coronavirus pandemic, still high inventory levels and increased output from Libya are all limiting gains.
- Euro zone inflation data
Data on Tuesday is expected to show that euro zone inflation fell again in November, with economists expecting a drop of 0.2% year-on-year.
The European Central Bank has already said it expects inflation to average -0.2% year-on-year in the fourth quarter, but a fourth straight month of negative price growth may cause alarm bells to ring. ECB chief economist Philip Lane warned recently against tolerating low inflation.
The data is expected to underline the need for more stimulus ahead of the ECB’s upcoming December policy meeting, with analysts already expecting an expansion of the banks bond-buying program and cheap loans for banks.