Dual Test of U.S. GDP & Core Inflation, Tech Investors Eye Tuesday

Brief:

This week’s market focus is squarely on U.S. inflation data and economic growth performance. Following the end of the government shutdown, Wednesday’s Core PCE and revised GDP figures will be of paramount importance, directly influencing Federal Reserve policy expectations. Concurrently, the Reserve Bank of New Zealand’s rate decision and Tokyo’s CPI data will provide monetary policy clues for the Asia-Pacific region. Tech stock investors should also be aware of the potential market impact from comments by Michael Burry regarding the financial quality of tech giants.

Key Event to Watch:

1. U.S. Dallas Fed Business Activity Index – Monday

This data release measures the state of manufacturing in the Texas region. A reading above zero indicates expansion in business activity. The index serves as a useful reference for the overall health of the U.S. economy.

2. Michael Burry’s Comments on Tech Giants – Tuesday

Prominent investor Michael Burry is expected to disclose more details regarding his view that tech giants have “understated depreciation leading to inflated profits.” This could draw market scrutiny to the financial quality of tech stocks and is worth monitoring for investors.

3. U.S. Q3 GDP (Revised) & October Core PCE Price Index – Wednesday

Two critical data points are due on Wednesday:

U.S. Q3 GDP (Revised Estimate): This will provide a more accurate assessment of the U.S. economic growth trajectory.

U.S. October Core PCE Price Index: As the Federal Reserve’s preferred inflation gauge, the result of this data will directly impact market expectations for the Fed’s monetary policy path.

4. RBNZ Rate Decision – Wednesday

On the same day, the Reserve Bank of New Zealand (RBNZ) will announce its November interest rate decision. After an unexpected 50-basis-point cut in October, the market’s focus is on whether the central bank will continue its easing policy to support the weak domestic economy. More dovish language on the future rate path would likely put further downward pressure on the New Zealand dollar.

5. Japan Tokyo CPI Data – Friday

The Tokyo CPI is a leading indicator for Japan’s nationwide inflation. If the data continues to exceed the Bank of Japan’s 2% target, it will reinforce expectations for monetary policy normalization and influence the yen’s trajectory. However, given the current expansionary fiscal policy in Japan, a stronger-than-expected inflation reading may only provide short-term support for the yen exchange rate.