Ipek Ozkardeskaya
Swissquote Bank Ltd
US inflation reassured Fed hawks
by Ipek Ozkardeskaya
The European equities surged on somewhat stabilised oil and commodity prices.
The US inflation figures matched the market expectations in November. The headline inflation remained flat, while once the impact of food and energy prices discounted, the prices inflated 0.2% on month. Given the cheaper energy and oil prices, the Fed may have some additional difficulty to lift the consumer prices to their 2% target soon enough, nevertheless the price in services appear to counterweight the deflation in the energy and commodity complex. And this is good news for the Fed preparing to raise its interest rate by 25 basis point for the first time since 2006.
The better-than-expected empire manufacturing read is an additional support for the Fed. It is the first time since July that the empire manufacturing has beaten the market expectation.
The sovereign market priced in 78% chances for a 25 basis point hike. The Fed will certainly temper the hawkishness of the rate tightening by a fairly dovish accompanying statement.
The US equity futures have followed the lead of Europe and we call
- the S&P 500 18 points higher to 2039.60
- and the Dow 112 points higher at the open to 17490.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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