The Dow closed above 11,000 for the first time since May on Friday on a soft Unemployment report that indicated to some market participants that the Fed will commence QE2 on November 3rd. The dollar was weaker, and gold made new highs at $1,350.
With no already scheduled POMOs this week, we may have a chance to trade on economic data, earnings, etc (but we are the Smith Report aren't holding our breath!)
The schedule for the coming week's events is posted below.
Monday - Dudley and Bernanke speak Today. Both publicly in favor of QE2, so this should give the bulls a chance to run. We will likely hear things along the lines of, "more monetary stimulus appears necessary" and "inflation below mandate."
Tuesday - FOMC minutes from Sept 21st meeting. Everyone will be looking for clues re: QE2.
Wednesday - MBA Mortgage Applications, Export and Import Prices, Crude Inventories, and Treasury Budget, China Trade, Eurozone Industrial Production, POMO SCHEDULE FOR COMING MONTH out at 11 am PST. (Could anything be more important???).
Thursday - Initial and Continuing Claims, PPI, Trade Balance. PPI likely to continue to support deflationary trends or at least 'below mandate inflation' providing the Fed to continue to perpetuate idea that QE2 is acceptable because of low inflation. Ditto for the CPI report on Friday.
Friday - CPI, Retail Sales, NY Fed - Empire Manufacturing Survey, Michigan Sentiment, Business Inventories. Retail sales likely to come in fairly solid as both the most recent auto sales and chain store sales reports beat expectations.
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