Inflation data and speech heads Central banks this week
2022.12.12 06:29
Inflation data and speech heads Central banks this week
Budrigannews.com – In what has been an “annus horribilis” for global markets, a flurry of significant central bank decisions and a crucial U.S. consumer price inflation reading this week likely clear the decks.
Markets remain nervous about the U.S. CPI release and signaling on the rate trajectory for next year, despite expectations that all four major monetary authorities deciding policy this week will downshift interest rate rises to 50 basis point moves.
Early on Monday, the implied volatility of the U.S. equity market rose to its highest level in nearly a month, a reflection of some of that uncertainty and year-end anxiety. Stocks in Asia and Europe were lower, and U.S. stock futures were also flat to negative.
The Federal Reserve of the United States is anticipated to raise interest rates once more on Wednesday, but it will do so in increments of half a percentage point, from 4.25 to 5.5%, with an additional full point of increases scheduled for the subsequent two meetings through March 2023.
Futures markets still anticipate a Fed “terminal rate” of just under 5% for next year. Any change in the median indications of Fed policymakers on that, or the “dot plot,” will likely be very sensitive as they monitor wider financial conditions.
With consensus forecasts for a drop in the annual inflation rate to 7.3% from 7.7% in October, as the “core” rate ticks down to 6.1%, the November CPI report due on Tuesday ahead of the Fed decision may pack as much punch as the rate increase itself.
Unless another unexpected shock occurs, U.S. Treasury Secretary Janet Yellen predicted a “substantial reduction” in inflation in 2023 on Sunday. On Monday, oil prices remained near their 2022 lows, with the year-over-year change now near zero.
On Thursday, the Swiss National Bank, the European Central Bank, and the Bank of England are all expected to slow their rate hikes by 50 basis points.
On Friday, CFTC data showed that speculators had opened up their largest net short dollar positions since the middle of 2021, resulting in a slight decline in the dollar on Monday. Before a new auction of 10-year paper later on Monday, ten-year U.S. Treasury yields were also slightly lower, falling to 3.53 percent.
Earlier, investors worried that an increase in COVID-19 cases might disrupt manufacturing and consumption caused China’s stock market to fall. There were growing concerns that the number of infections could increase and lead to additional disruptions following China’s dramatic shift toward economic reopening last week.
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Land engineers’ portions recorded in central area China and tech monsters exchanged Hong Kong plunged over 4% each on Monday. November saw increases of over 30% in both sectors.
Although output was impacted in September by a one-time public holiday to commemorate Queen Elizabeth’s funeral, Britain’s economy rebounded in October slightly more strongly than anticipated, recession remained a possibility.
Microsoft (NASDAQ:) is mentioned in corporate news. is to acquire a four percent equity stake in the London Stock Exchange Group (LON:) as part of a commercial agreement for ten years to move the exchange operator’s data platform to the cloud, the British company said on Monday.
According to sources who spoke with Reuters, Zeekr, one of the upscale electric car brands produced by Chinese automaker Geely, has secretly filed for a U.S. initial public offering with the intention of raising more than $1 billion.
The following are important developments that could guide U.S. markets later on Monday:
* Tiff Macklem, Governor of the Bank of Canada, gives a speech
* The U.S. Treasury auctions 3- and 10-year notes
