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It is all about stimulus this week. Risk appetite will take its cues from the Fed and possibly from Congress. The Fed could deliver fresh measures following softer economic data and no fiscal aid from Congress. Expectations are growing for the Fed to extend the average maturity of their Treasury purchases. The risk of Congress going home for the holidays without delivering a rescue bill is growing by the day. The key sticking points remain liability protections and aid to state and local governments.
On the data front, the flash PMI readings could show modest weakness in both the manufacturing and service sectors. Both retail sales and industrial production in November are expected to decline, while housing data appears poised to steady,