- US equities gained across the board amid relief that US inflation didn’t again surprise on the upside.
- The S&P 500 gained about 0.5% and is back around 4690.
US equities gained across the board amid relief that the November US Consumer Price Inflation (CPI) report didn’t again surprise on the upside. The S&P 500 gained 0.5% to recover from Thursday’s 4667.40 close to around 4690. The Nasdaq 100 was up 0.7% and the Dow was up 0.25%. The VIX fell a further more than 2.0 points to under 19.50.
For reference, headline CPI came in at 6.8%, in line with expectations. Some had been expecting an upside surprise following remarks from US President Joe Biden who seemed to pre-emptively playdown inflation fears, which market participants took as an indication that Friday’s number would be higher than expectations. Note that Biden gets to see the important data releases one day early. Still, the headline rate of inflation was at its highest in nearly four decades.
According to JPM’s Jai Malhi, “today's rise in US inflation was broadly expected but it does confirm that price pressures continue to build but also broaden out”. “This release,” he continued, “won't deter (the Fed) from speeding up the (taper) process, allowing the central bank to raise rates earlier next year if required.” A recent poll conducted by Reuters showed the median expectation of poll participants was for the Fed to start hiking rates in Q3 2022, followed by a second hike in Q4. Most said the risk was that hikes would come earlier, rather than later.
Given a recent shift in Fed language that some analysts have pointed out, betting on a first hike in Q3 might be overly dovish. Rather than continuing to emphasise that raising interest rates too early was a threat to the labour market recovery in the US, the Fed has pivoted to calling inflation a threat to the recovery in the US.
By many metrics, claims some analysts, the US labour market is already pretty much back to full employment – just this week, weekly initial jobless claims fell to their lowest since 1969 at 184K and JOTLs data showed the number of job openings in October moved back above 11M again. The Fed may now see containing inflation as a way to protect recent labour market progress. If the Fed does surprise in 2022, this might make things difficult for growth/duration-sensitive stocks (like big tech) as yields are pushed higher.
|Today last price||4689.56|
|Today Daily Change||22.43|
|Today Daily Change %||0.48|
|Today daily open||4667.13|
|Previous Daily High||4698.72|
|Previous Daily Low||4665.21|
|Previous Weekly High||4670.48|
|Previous Weekly Low||4492.17|
|Previous Monthly High||4741.45|
|Previous Monthly Low||4557.43|
|Daily Fibonacci 38.2%||4678.01|
|Daily Fibonacci 61.8%||4685.92|
|Daily Pivot Point S1||4655.32|
|Daily Pivot Point S2||4643.51|
|Daily Pivot Point S3||4621.81|
|Daily Pivot Point R1||4688.83|
|Daily Pivot Point R2||4710.53|
|Daily Pivot Point R3||4722.34|
Follow us on Telegram
Stay updated of all the news
AUD/USD extends gains above 0.6700 amid subdued US Dollar
AUD/USD is trading firmer above 0.6700, having rallied to the highest in nearly two weeks on Wednesday after the Fed hiked rates by another 25bps, as expected. The dovish guidance by the Fed smashed the US Dollar alongside the Treasury bond yields.
EUR/USD re-attempts 1.0900 on dovish Fed-induced USD weakness
EUR/USD is trading near 1.0900, extending gains early Thursday. The pair stays firmer amid a broadily depressed US Dollar. Investors are assessing the latest dovish outlook from the Fed ahead of the SNB and BoE policy outcomes, which could trigger fresh volatility surge across the FX board.
Gold set to retake $2,000 on dovish Federal Reserve outlook Premium
Gold is gathering pace for the next push higher as US Dollar stays offered. US Treasury bond yields got smashed on dovish US Federal Reserve policy guidance. XAU/USD price is forming a bull pennant on the daily chart, with a bullish RSI.
Binance market share could drop after abolishing most zero-fee trading, boosts TrueUSD stablecoin
Binance phased out almost all zero-fee buying and selling Bitcoin (BTC) along with multiple trading pairs from its platform after nine months on Wednesday. An exemption was allowed for the TrueUSD/Bitcoin (TUSD/BTC) pair. This built atop a March 10 move to quietly wind down BUSD auto-conversion.
Bank of England and Swiss National Bank both set to hike
The Bank of England and Swiss National Bank both make monetary policy announcements tomorrow, March 23. Our base case is for the Bank of England to raise its policy rate 25 basis points to 4.25% this week, and then pause tightening. However, an unexpected quickening of inflation has added some uncertainty to that outlook.