A very encouraging US inflation report, UK jobs data also promising

We've seen quite a response to the US inflation report on Tuesday, with investors clearly buoyed by the miss on both the headline and core numbers.

While in both cases we're talking about modest misses, it does feel nonetheless significant. The annual core rate fell to 4% which is still far too high but the monthly reading fell back to 0.2%, preventing an anticipated third month of 0.3% and the possible development of a stubborn trend, which is still broadly on the way down.

It may sound marginal but paired with a miss on the headline to 3.2 on an annual basis and flat on a monthly and this looks like a really promising report. Of course, there's another to come a day before the December meeting but today potentially lays the groundwork for the Fed to adopt a much less hawkish position - especially compared with September - and markets are now seemingly convinced the tightening cycle is over.

On the back of this release, US indices have had a strong start on Wall Street, with the Nasdaq the clear outperformer but the S&P and Dow also posting gains of more than 1%. European equities have also been given a boost, adding more than half a percent since the release.

Gold boosted as the Dollar and US yields fall

Gold has been given a big lift by the inflation data, unsurprisingly, adding almost 1% and suddenly looking in better shape after falling almost 4% over the previous two weeks. The question now is can it maintain that positive momentum and take another run at $2,000 where it repeatedly failed to significantly break above at the end of October?

Positive signs in the UK jobs report

Earlier we had UK employment figures and while on the face of it, the report didn't look great, recent earnings data does look much more positive. Unemployment has already risen quite a lot over the course of this year - prompting the BoE to recently claim it will need to rise further in order to be consistent with 2% inflation - and there are promising signs in recent releases that suggest wage growth is subsiding and will continue to do so. Much more evidence is naturally needed.