■ Fed Oct minutes: Anticipation for labor market & inflation conditions to allow December liftoff

■ Fed’s Fischer suggests market should not be surprised from a December liftoff

■ U.S. Markets deep within green territory, in spite of forthcoming liftoff

■ ECB’s Draghi hints of more QE ahead

U.S. markets have been showing signs of resilience last week, in spite of repetitive indication by the Fed that December’s rate hike is on the table. The S&P 500 (SPY) added 3.3% during the week, rising once again above its 200 day moving average, and concluding the week at 2089.17 points. The Nasdaq (QQQ) surged by no less than 3.6%, and is now a mere 2.2% lower than its all-time record.

The Fed’s hawkishness, on the other hand, was certainly evident. Minutes from October’s rate decision, namely, stated that most FOMC participants anticipated that labor market and inflation conditions would allow lifting the Federal Funds rate in December’s announcement. It did come with a small disclaimer, as the beginning the “normalization process” sooner, was suggested to induce a more “shallow” policy trajectory. Hawkish remarks were further made by Fed vice chair Fisher, who said that “we have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market (and other) central bankers have, for some time, been telling the Fed to ‘just do it.’”

Seeing the glass half full

Half filling the market’s glass, we have ECB President Draghi, who gave a speech on Friday, titled “Monetary Policy: Past, Present and Future.” As one could infer from that, it saw Draghi listing the benefits of the thus-far accommodative policy by the ECB, while emphasizing the fact that achieving its 2% inflation target has yet to come. This brought the question of whether the aforementioned accommodation is indeed sufficient to secure the ECB’s price stability target. From that, Draghi went on to support the ECB’s policy, listing the positive effects that it has had on Small and Medium Enterprises, while downplaying its effect in stimulating an asset price inflation. In conclusion, Draghi stated that “if we decide that the current trajectory of our policy is not sufficient to achieve that objective, we will do what we must to raise inflation as quickly as possible.”

With that providing further backwind to the European markets, the DAX is now at a very impressive 3.8% weekly gain and is off a mere 10% away from its peak levels recorded in April. More moderately, the CAC 40 is up 2.1% during the week and the Athens Stock Exchange is up a bit less than 1%. Monetary accommodation also took a toll on the Euro, seeing it weaken approx. 1.2% during the week vs. the Greenback, 0.9% of this on Friday alone.