Some short-term caution

Economics

This week we expect US personal spending growth to slow in November. Durable goods orders growth should have improved, after a weak October.

In Europe we expect French consumer spending in November to moderate after strong growth in October.

The Belgian National Bank leading indicator should recover somewhat in December. In Japan we expect the Ministry of Economics all industry activity index to rise moderately in October.

Foreign exchange

Euro/dollar: As long as the 1.3140 holds to the downside, we would look for further gains towards 1.3700.

Dollar/yen: The dollar finds itself still in the process of correcting the October-November decline. As long as 103.45 holds to the downside, the dollar may still try to test next resistance at 107.25.

Fixed Income

Yield curves in the U.S. and Europe were moving marginally up over the week. U.S. economic data were overall positive and the decision by the U.S. Fed to raise rates was confirming the recent expected trend.

The Fed's decision and comments as well as recent economic data suggest rising bond yields in the U.S.

Yields are also expected be moderately rising in Europe over coming days after the positive surprise from the Ifo index and the expected recovery of the business sentiment index of the Belgian National Bank.

Equities

After starting off strongly on Monday and Tuesday, indices lost some momentum towards the end of the week.

Although liquidity and the fear to miss out on the current rally remain the main drivers behind the current market move, increased M&A activity also caused some commotion.

The 25 basis points rate hike which was implemented by the Fed was entirely expected and Mr Greenspan's comments didn't come as a surprise either.

In the coming weeks we foresee a technical pull-back, implying some caution for the short run. We stick to our overweight positions in Telecom, European Financials and U.S. Healthcare.