We crank up the activity today with several key monthly indicators, including US Retail Sales, followed by the last FOMC meeting of the year this evening, which will be the last such meeting for several of the hawks in the group. 
FOMC meeting to come and go with much fuss: With the economy having sped up in the second half of the year we expect today’s (single-day) FOMC meeting to be a non-event. Recent chatter about more stimulus by some members of the committee is bound to be more subdued this time around with the economy having accelerated while inflation, as measured by Core PCE, has eased a bit and currently stands at 1.7 percent year-on-year. In terms of rates there will, of course, be no changes to the Fed Funds Rate which will continue to have a target of 0 to 0.25 percent.
This will be the last meeting for several hawks as three hawks are set to be replaced in 2012 while only one hawk will enter.
Germany ZEW to soften further? Though the Eurozone economy, and with it, Germany, will struggle in 2012 as austerity and private sector indebtedness keep a lid of growth, the most recent IFO survey showed a resilient Germany. The IFO Business Climate (Composite) Index rose to 106.6 in November from 106.4 earlier and above expectations of 105.2. The rest of the released November numbers have been mixed, however, and consensus expects continued weakening in today’s December ZEW report with both indices set to ease.
US Retail Sales, Business Inventories to rise: The downward revision to 3Q’11 GDP in the US was driven by slower than expected inventory accumulation, but while this is negative for that quarter alone it could mean even higher fourth quarter growth, which is currently tracking around 3 percent QoQ annualised. Today’s Business Inventories report will give us more information about the state of inventory accumulation in October and, hence, the fourth quarter.
That is, however, not bound to get much attention today as the Retail Sales report is also released (1½ hours earlier) with consensus looking for solid gains of 0.6 percent (0.4pct. ex autos). Incomes rose faster than spending in October which pushed the savings rate higher after it had declined to its lowest level since before the Great Recession in September. Incomes need to follow along for US households to continue to spend at the current rate.
Other data today: Before all this we have plenty of data from the UK and Sweden, especially UK CPI, while the US will also release the “small business ISM” report (NFIB Small Business Optimism), which remains in recessionary territory.
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