Today's key release will be the US CPI inflation figures for October

Market movers today

  • Today's key release will be the US CPI inflation figures for October. We expect inflation pressure to have remained muted, as CPI inflation is likely to have been negat ively affected by the fall in energy prices in October. Hence, we project the headline CPI inflat ion rate to have fallen to 1.9% y/y from 2.2% in September, while the core inflat ion rate will remain unchanged at 1.7%.

  • In the UK, the labour market report for September is due to be released, where consensus is for an unchanged reading of the unemployment rate at 4.3%, while wage growth is likely to stay muted, despite the low unemployment level.

  • After yesterday's panel debate between the Fed's Janet Yellen, the ECB's Mario Draghi, the BoE's Mark Carney and the BoJ's Haruhiko Kuroda brought lit t le news regarding the future direct ion of monetary policy, markets will again watch out for any comments from the ECB's Peter Praet at the closing panel of the ECB's conference on cent ral bank communicat ion today.

  • There are no significant key economic data releases in the Scandi count ries.


Selected market news

The sell-off in the equity market has continued this morning with the Asian equity market selling off on the back of (1) whether stocks have become too expensive and investors are rotat ing into fixed income, (2) the uncertainty regarding the US tax reform and (3) speculat ion of an oversupply in commodit ies. Hence, ‘commodity-related’ stocks have been under pressure this morning in Asian markets.

Focus is now turning to the US CPI data and retail sales released this afternoon as the market is looking at the st rength of the US economy and whether the flat tening of the US yield curve is an indicator for a slowdown in the US economy as some investors have indicated. The market /investors seems very divided on this as other investors believe that the US yield curve is seriously mispriced and yields on long-dated US Treasuries should rise significant ly given the economic momentum, the risk of more long-dated issuance on the back of the US tax reform and t ighter US monetary policy. For now, the US curve is in bullish momentum with a bullish flat tening from the long end as seen yesterday, where 10Y US Treasuries fell 3bp.

In the FX market , the dollar has remained stable around the 1.18-level versus the euro, while USD/JPY was down towards the 113 level this morning. SEK and NOK have been stable in Asian t rading after a substant ial weakening yesterday against the EUR.


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