The Federal Reserve are Expected to Raise Interest Rates
European markets are trading lower despite the fact that the US markets got closer to their all time high yesterday, and the S&P500 made another record high yesterday. Investors were surprised yesterday when the markets only saw a brief sell off after the FOMC member James Bullard confirmed yesterday that there may not be any harm to initiate a small taper in the next Fed meeting.
Perhaps the optimism is around the US budget deal, that the US government will be able to divert another government shutdown, but how much reality is in that, depends on time.
US futures are also trading soft this morning on the back of the Chinese data, as it is somewhat difficult to make a clear sense of this data. Industrial production for the month of November fell below expectations of 10.2% with the final reading of 10%. However, the retail data on the other hand came much stronger by blowing past the expectations of 13.2% with the final reading of 13.7%.
German industrial production data which disappointed investors yesterday is also weighing on the markets as many are concerned, if the recovery is strong enough as previously thought. French production data released this morning also fell below the expectations of 0.2% when the reading came in at -0.3%
Back in the UK, all eyes are pinned towards the manufacturing production data and the expectations are for 0.4%. The data is due at 09:30 GMT. We are expecting that the final reading could be as strong as the PMI data for the month.
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