Economic data may be only thing not priced in this week

While most of the focus of the week will be on the elections and the FOMC meeting, assuming no surprises, the results of both have been priced in. The Fed in particular rarely wants to surprise the markets. Thus, the important factor of the week in moving markets may lie more with the economic data. Both the state enterprise and private sector weighted PMI manufacturing indices in China rose to 6 month highs and the news buoyed the Shanghai index and the rest of Asia ex Japan. The Yuan fell sharply to a 4 week low vs the US$, proving the Chinese will bend to no one, not even Tim Geithner, in strengthening their currency. A more flexible and freer floating Yuan will happen over time but the pace will be dictated by China, as it should. UK manufacturing PMI was better than expected and the pound is at a 9 month high vs the US$. The US ISM manufacturing index for Oct is expected to be little changed from Sept and starts a heavy economic calendar.

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