Friday’s US jobs report for November will be the main event this week as investors remain hopeful that the Federal Reserve will soon slow the pace of rate hikes. Fed chief Jerome Powell’s remarks in the middle of the week will be closely watched. Eurozone inflation data will also be in focus, as will China’s PMI data amid concerns about a resurgence of COVID-19 cases. Here’s what you need to know at the start of the week.

1. The state of the non-manufacturing labor market

Expectations that the Federal Reserve may soon slow the pace of sharp rate hikes intensified after last week’s release of the minutes of the central bank’s November meeting. Friday’s U.S. jobs report for November will put those expectations to the test.

Economists expect the U.S. economy added 200,000 new jobs, which would be the smallest gain since December 2020.

The jobs report is also expected to show that growth in average hourly earnings is slowing and the unemployment rate remains at just above a 50-year low of 3.7%.

It will be the last U.S. nonfarm payrolls report before the Fed’s final meeting of the year in December.

But investors have reasons to remain cautious:5 of the last 6 employment reports have been better than forecasts, and another strong release could spell trouble for the US stock market.

2. Fed speakers

Fed Chairman Jerome Powell will discuss the economic outlook during a speech at the Brookings Institution on Wednesday.

While Powell said the Fed could move to smaller rate hikes next month, he also said the rate could end up being higher than policymakers thought by next year.

Meanwhile, St. Louis Fed chief James Bullard and New York Fed chief John Williams are scheduled to speak on Monday.

The economic calendar also includes ISM’s manufacturing PMI and the Fed’s favorite inflation gauge, the core PCE price index. Both reports will be released on Thursday.

Other reports for the week include ADP’s nonfarm payrolls, initial jobless claims, consumer confidence and the Fed’s Beige Book.

3. Retailers

When Wall Street reopens after the Thanksgiving holiday, investors’ attention will be focused on how retailers are doing during the holiday shopping period as well as the Fed’s next steps.

Black Friday sales have taken off amid continued high inflation and slowing economic growth. Retailers are offering significant discounts both online and in physical stores, which is likely to impact profit margins in the fourth quarter.

Online spending, according to an Adobe Analytics report released Saturday, rose 2.3% on Black Friday to a record $9.12 billion, but the percentage increase was well below the annualized inflation rate, which now stands at 7.7%.

U.S. retailer stocks have become a barometer of consumer confidence as inflation “bites.” The S&P 500 Retail Index is down just over 30% this year, while the S&P 500 Index is down 15%.

4- Eurozone inflation

While there were tentative signs that U.S. inflation may be peaking, eurozone inflation data released on Wednesday is expected to show that price pressures in the bloc remain strong.

Eurozone CPI reached 10.6% in October, more than five times the European Central Bank’s 2% target.

At its October meeting, the ECB raised the policy rate by 75 basis points to 1.5%, bringing the total number of hikes to 200 basis points since July, the fastest monetary policy tightening in history.

Minutes of the ECB’s October meeting released last week showed that while officials were adamant about the need for further rate hikes to reduce inflation, they could not reach full agreement on the ultimate target and pace of the increase.

Market rates are oscillating between a 50 and 75 basis point rate hike at the next ECB meeting on December 15.

5. China PMI Index

As China struggles with a record number of COVID-19 virus infections and new restrictions, hopes for the world’s second largest economy to reopen in the first quarter of 2023 have faded.

The country’s PMI data on Wednesday will be closely watched as widespread COVID-19 restrictions continue to depress economic activity.

The country’s authorities have vowed to continue imposing restrictions due to the spread of the virus despite growing public outcry and mounting damage to the economy.

China said on Friday it would reduce the amount of cash banks must hold as reserves for the second time this year, freeing up liquidity to support the weakening economy.