Looking over last week, markets in the US had a shortened week as they closed for the Thanksgiving holiday, consumers flocked to the high street (both physically and online) to snap up Black Friday deals, and protests broke out across China.

Welcome to our Astute Market Overview of the last week.

Given that inflation has surged over the year, announcements from central banks are closely observed. Economists want to know their monetary policy decisions as soon as possible, as these decisions impact consumers, businesses, economies and markets. The narrative from central banks is always digested and analysed, but perhaps more so this year.

In the US, the Federal Reserve Open Market Committee is a 12-person committee. They meet 8 times across the year to determine monetary policy in the US with two goals: price stability and sustainable economic growth. The minutes from their last meeting were released this week, and showed that many members of the committee voted for moderation in the pace of interest rate hikes in the US. This added to speculation that a smaller interest rate hike for the US may be in store next month, when compared to the recent spate of 0.75% hikes.

Elsewhere, the Chinese central bank announced that they would cut their reserve requirement ratio (RRR), which is the amount of cash reserves that banks must hold.  This move is designed to add liquidity and support the economy, and comes as China’s National Health Commission reported steadily increasing numbers of daily covid cases across the week. Many regions in the country remain in lockdown, and as the week slid into the weekend, protests over lockdowns measures and political freedoms erupted across China, following a fire in Xinjiang. We’ll watch the government response closely, to see how president Xi Jinping will work to bring back a sense of stability.

We saw plenty of preliminary Purchasing Managers Index data released this week (often shortened to PMI). The measure is expressed as a number between 0-100, and summarises whether market conditions are expanding (a reading of above 50), staying the same or contracting (a reading below 50). Data released by S&P showed flash manufacturing and services data for the UK, US and eurozone all below 50, indicating the prevailing direction is recessionary. This came as no real surprise – we believe that a recession in each of the regions is priced into markets.

A few things we will look out for this week:

• We’ll have eurozone CPI and consumer confidence released, giving us an indication of price increases over the last month, and consumers’ optimism.
• In the US we’ll see nonfarm payrolls, a key statistic for the US labour market.