The
immediate fallout from any sign of diminishing U.S. inflation would be further
to boost expectations that the Fed will delay any slowing of its quantitative
easing (QE) asset-buying program. Yellen has already fed this expectation at
her confirmation hearing. Falling inflation would mean the QE money-printing
might even be useful to ward off any deflation threat, on top of pumping up the
economy. This, in turn, will provide some succor to emerging markets -
particularly those with high current account deficits - that have seen their
currencies clobbered as the prospect of U.S. stimulus ending has pulled cash
out of their economies.
India,
Indonesia and Turkey have been particularly hard hit this year.
Markit's
flash PMI indexes are expected to underline the unevenness of economic
recovery, particularly in the euro zone. Third-quarter gross domestic product
released last week showed the euro zone barely growing with No. 2 economy
France contracting and No. 1 Germany's pace of growth slowing. Analysts at
Barclays described the euro zone as undergoing "a somewhat disappointing
recovery".
The
consensus forecast for the flash euro zone composite PMI, incorporating both
manufacturing and services, is for a very slight rise to 52.0 from 51.9 a month
earlier. That would indicate expansion and be the highest since the middle of
2011. But it is still below its long-term average. The U.S. economy is, on the
face of it, in better shape. GDP grew at an annual 2.8 percent in the third
quarter, albeit boosted by inventories.