In the inter-holiday period, the temperature may be raised by the budget act for next year. There will be a government meeting on Wednesday. In the last days of the year, activity on financial markets will be limited, low liquidity may promote greater volatility. However, investors hope that the so-called The Santa Claus Rally will bring record increases. Few macroeconomic data will be released to the market.
On Wednesday at A meeting of the Council of Ministers is scheduled for 11.00, during which, among others, the government will become acquainted with the information from the Minister of Finance on the financing of the Church Fund in 2024 and information on increasing the financing of health services in the field of pediatric oncology.
Budget disputes between the government and the president
President on the weekend Andrzej Duda announced his veto of the budget-related bill, which included PLN 3 billion for public media. As he indicated, he will submit his own project regarding, among others, raises for teachers and other expenses planned in this act.
This week, parliamentary committees will work to consider and provide opinions on the government’s draft budget act for 2024 for the Public Finance Committee (KFP).
Last week, the government adopted the draft budget act for 2024, which assumes a budget deficit of PLN 184 billion and a sector deficit of 5.1%. GDP. After the first reading of the bill last Thursday, the Sejm referred it to a committee.
According to the resolution of the Presidium of the Sejm, individual parts of the project are to be reviewed by relevant committees by December 29, and the public finance committee is to present a report by January 5.
The second reading of the bill at the plenary session of the Sejm is scheduled for January 10, 2024, and the third reading, i.e. voting, is scheduled to take place on January 12. The Senate is scheduled to finish considering the bill by January 22. It is expected that the budget will be signed by the president on January 29.
NBP before the Public Finance Committee
On Thursday, the National Bank of Poland will present the Monetary Policy Assumptions for 2024 and Information on the activities of the Financial Stability Committee in the field of macroprudential supervision in 2022 to the Public Finance Committee.
Moreover, on Thursday, the National Bank of Poland will publish a report entitled “The situation on the housing market in Poland in the third quarter of 2023”, and on Friday quarterly data on the balance of payments, foreign debt and Poland’s international investment position.
The publication of the supply of Treasury securities for Q1 2024 may be important for the debt market Ministry of Finance should present on Friday. The ministry will also publish a tender calendar for the entire 2024.
In the last days of the year, activity on financial markets will be limited, low liquidity may promote greater volatility. However, investors hope that the so-called The Santa Claus Rally will bring record increases. The market will receive sparse macroeconomic data, mainly from the United States. In Spain, the flash inflation reading will be published.
Hopes for the “Santa Claus Rally”
The main topic on financial markets this week may be the lack of liquidity – due to the inter-holiday period, many investors will be absent. With limited liquidity, asset prices may fluctuate more and react even to less important news.
However, investors hope that the so-called The Santa Claus Rally, a period of strong bull market that usually takes place in the last days of December and the first sessions of January, will bring record increases.
On Wall Street, the S&P500 index increased by over 4% in December alone, and by 24% since the beginning of the year, approaching a new record. Historically speaking, this dynamics should continue in the short term. The S&P 500 index gained an average of 1.3%. during the last five days of December and the first two days of January, according to Stock Trader’s Almanac data dating back to 1969.
This year, optimism in the markets is high. The US Federal Reserve surprised investors in December by signaling that the tightening of monetary policy in the US was probably over and pointing to interest rate cuts by 2024 – this was a consequence of signals that inflation in the United States continued to decline. Friday’s data confirmed this trend, showing that annual U.S. inflation – as measured by the personal consumption expenditures (PCE) price index – fell below 3% in November.
– The narrative in markets will continue to be of a dovish Fed. This supports the sentiment and it is unlikely that it will change in the coming days, says Angelo Kourkafas, senior investment strategist at Edward Jones.
Investors have shown strong appetite for stocks recently. Bank of America customers bought a net worth of $6.4 billion in U.S. stocks last week, the largest weekly net inflow since October 2022, BofA Global Research said in a December 19 report.
This week, the market will receive limited macroeconomic data, mainly from the USA, including regional Fed surveys from Dallas and Richmond, real estate price indices, an index of signed home purchase agreements, as well as the weekly number of mortgage loan applications and applications for unemployment benefit.
From macroeconomic data from Europe, investors will learn, among others: preliminary data on CPI inflation and retail sales from Spain.
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