After three major US benchmark indices finished lower during the regular trading session as investors prepared for a key U.S. inflation reading and major financial company corporate earnings results, December S&P 500 futures (ESZ22) are trending up +0.35% this morning. Losses in the Utilities, Telecoms, and Industrials sectors made up the majority of the weighting in three major stock indices in the United States.
The producer prices index data released by the Labor Department came in slightly higher than anticipated, maintaining unchanged expectations for the Fed’s November rate hike. In addition, the minutes of the September meeting revealed that a number of Fed officials “emphasized the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.
In a note, Morgan Stanley stated, “With no notable pushback [in the FOMC minutes] against the current pace of rate hikes, we see the FOMC on track for another 75bp hike in November. “In the meantime, U.S. rate futures have priced in a 18.7% probability of a 50 basis point rate increase and an 81.3 percent probability of a 75 basis point increase at the monetary policy meeting in November.
At 03:04 In the next few minutes, there might be a glimmer of hope that, basically, officials are weighing the risk of hiking too hard or too high. “That is not the primary concern at this time. “Inflation remains our primary concern
Today, the Labor Department’s fresh consumer price index (CPI) data in a few hours is the focus of all attention. In comparison to the previous value of +0.1% m/m and +8.3% y/y, economists anticipate that the September CPI will be at +0.2% m/m and +8.1% y/y.
Investors will likely also pay attention to the U.S. Initial Jobless Claims data, which showed 219K claims last week. The new number, which will be reported today for the U.S. Core CPI, is predicted by economists to be 225K.Compared to August figure of +0.6% m/m, economists anticipate this figure to be +0.5% m/m.
Additionally, data on U.S. crude oil inventories will be reported today. According to economists, this number will rise to +1.750 million, up from the previous week’s figure of -1.356 million. In the bond markets, the 10-year interest rate for the United States is currently at 3.91 percent, which is an increase of +0.43 percent.
This morning, the Euro Stoxx 50 futures are up +0.30%.However, those gains are likely to be fragile as market participants consider the possibility of a global recession ahead of the release of important inflation data from the United States and the ongoing turmoil in the British market. Wall Street and Asia have given European stocks a negative handover after main indices edged lower as investors feared a potential shock from U.S. inflation data following the Federal Reserve policy meeting minutes last month.
Today, data on Germany’s CPI, Germany’s HICP, and Switzerland’s PPI were made available.
In accordance with expectations, the German September CPI was reported at +10.9 percent month-over-month and 10.0% year-over-year. The European Central Bank was put under more pressure by Germany’s reading of high inflation to keep tightening monetary policy.
Expectations were met by Germany’s September HICP readings of +2.2% m/m and +10.9% y/y.
Compared to the value of -0.1% m/m and 5.5% y/y in August, Switzerland’s September PPI was +0.2% m/m and +5.4% y/y.
Today, Asian stock markets closed in the red. The Shanghai Composite Index (SHCOMP) in China and the Nikkei 225 Stock Index (NIK) in Japan both closed lower by -0.60%.
As the number of COVID-19 cases in China increased, concerns about reinstituting lockdown measures led today’s lower closing of the Shanghai Composite. After a three-month high in the number of infections in Shanghai, authorities have already closed schools and outdoor venues. Additionally, market participants will closely monitor any modifications to Beijing’s strict COVID Zero policy at the Chinese Communist Party’s 20th National Congress on Sunday.
The Power, Mining, and Paper & Pulp sectors caused today’s decline in Japan’s Nikkei 225 Stock Index to occur simultaneously. The implied volatility of Nikkei 225 options is taken into account by the Nikkei Volatility, which ended the day at 26.12, up 0.58 percent.
In contrast to expectations of +0.2% m/m and +8.8% y/y, the September PPI in Japan was reported at +0.7% m/m and +9.7% y/y.
