U.S. equity market finished with gains last week on signs that the Federal Reserve will slow the pace of monetary tightening in December. However, the S&P 500 has opened the week on a negative note as China’s angry anti-COVID zero policy protests swept the country and supressed global equity markets. Investors are realising such event could impact global growth and concerns about China have hit the rally.

Black Friday sales, inflation data, consumer confidence, the government second estimate for Q3 GDP are due this week; however, the main highlight will be the keynote speech from Fed Chair Jerome Powell on the economic outlook and the labour market on Wednesday, and the Nonfarm Payroll report for November on Friday.

Fed Chair Powell is expected to deliver a hawkish policy message pointing to the likelihood of slowing the pace of rate hikes, but warning that rates are likely to rise to a higher peak than previously planned. Another pushback against the premature easing of financial conditions appears likely, given that inflation remains uncomfortably high.

The Nonfarm Payrolls will be the last jobs report before the Fed’s final meeting for the year. Investors will be looking for signs if the U.S. economy is beginning to bear the weight of the Fed’s aggressive monetary tightening, as they grasp the worsening trade-off between fighting inflation and the damaging consequences of this year’s aggressive rate hikes.

Expectations that the Fed will soon slow the pace of rate hikes were boosted by last week’s minutes from the central bank’s November meeting and Friday’s U.S. jobs report will test those expectations. Economists are expecting the U.S. economy to have added 200K new jobs vs. 233K the prior month, which would be the smallest increase in two years. Growth in average hourly earnings is likely to start moderating, while the unemployment rate is expected to remain unchanged, just above its 50-year low at 3.7%. However, for the year ahead economist see unemployment potentially rising to 5%.