MORNING BID EUROPE-UK inflation to test market’s upbeat mood -November 15, 2023 at 12:30 am EST
A look at the day ahead in European and global markets from Tom
Westbrook
Just one-tenth of a percentage point was enough to trigger
big moves in global markets that were some of the sharpest we’ve
seen this year.
The U.S. CPI came in flat for last month, against consensus
expectations of a 0.1% rise. The core rate, at 0.2%, also
bettered forecasts for 0.3%. A high number would have amplified
the Fed’s recent hawkish tone, so the surprise move in the
opposite direction has had a dramatic effect.
Ten-year and two-year Treasury yields dropped 20 basis
points and the dollar marked its steepest selloff in a year,
highlighting how much markets’ expectations – and cash – were
riding on the data.
A pivot from hikes to cuts is now priced for May in the
interest rate futures markets, with a 30% chance it happens as
soon as March.
Next up is British inflation data, due at 0700
GMT. Expectations are for a big shift down for October, mainly
due to falling energy prices, with annual headline inflation
seen slipping below 5% for the first time since 2021.
October’s purchasing manager’s index survey, however, showed
services companies putting through their steepest price rises in
three months.
Sterling broke through its 200-day moving average
on Tuesday as the dollar slumped, and a sticky inflation reading
could propel further gains.
But geopolitics could spoil things.
In the Middle East, Israel raided the Al Shifa hospital in
Gaza, health officials told Al Jazeera.
Chinese President Xi Jinping is making his first visit to
the United States in six years and is due to meet President Joe
Biden on Wednesday morning, in what U.S. officials have billed
as a chance to reduce friction in the powers’ relations.
Meanwhile, good news from China added to the broad cheer.
Retail sales beat expectations, industrial output picked up and
the central bank poured liquidity into the banking system, which
together gave a boost to commodity prices.
Iron ore scaled 2-1/2 year peaks, and Singapore futures
are up almost 20% in just over a month.
Chipmaker Infineon and troubled energy company
Siemens Energy post earnings on Wednesday, although
the latter’s numbers are likely to be overshadowed by Tuesday’s
promise of an $8 billion government backstop from Germany.
U.S. retail sales figures are due at 1330 GMT. A drop is
forecast, while a strong reading could dampen the exuberance
over rate cut expectations.
Key developments that could influence markets on Wednesday:
Earnings: Infineon, Siemens Energy, Alstom, Target
Events: Xi-Biden meeting expected in San Francisco Bay Area
Economics: UK CPI, U.S. retail sales
(Reporting by Tom Wesbtrook; Editing by Edmund Klamann)
