© Reuters. FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA, September 24, 2021. REUTERS / Andrew Kelly / File Photo
A look at the day that awaits us from Dhara Ranasinghe.
It doesn’t seem to matter where you look these days, that sleeping beast, inflation, is clearly awake.
Thursday’s data showed prices at factories in China grew at their fastest pace on record in September, a day after figures showed another solid rise in US consumer prices.
The markets’ conclusion is that, temporarily or not, central banks are likely to respond to higher inflation sooner rather than later.
And with the minutes from last month’s Federal Reserve meeting showing lawmakers growing concern about inflation, investors have again anticipated rate hike expectations.
Fed funds futures have advanced expectations of the first rise since late 2022 to a near full price of a 25 basis point rise in September.
Furthermore, money market prices suggest that the Bank of England could move before the end of the year, the cautious European Central Bank could tighten up next year, and the openly dovish Reserve Bank of Australia could raise rates by the end of the year. 2023, a trajectory that does not materialize. with the guidance of the central bank.
On Thursday, Singapore’s central bank unexpectedly tightened monetary policy, citing forecasts of higher inflation.
Markets, which have valued higher inflation and tighter monetary policy prospects, appear to be in a calmer frame of mind in early Europe. Asian stocks rallied overnight, European and US equity futures also rose. US Treasury yields, while slightly higher, remain below their highs of several recent months.
Still, China’s real estate stocks fell as investors were concerned about a debt crisis in the sector.
The Turkish lira, at record lows against the dollar, is also in the spotlight after Turkish President Tayyip Erdogan fired three central bank officials.
Key developments that should provide more direction to the markets on Thursday:
– The BOJ legislator rules out the withdrawal of the stimulus even after the economy recovers
– Taiwan’s TSMC records a 13.8% increase in third-quarter earnings due to increased global demand for chips
– Japan dissolves parliament, setting the stage for general elections
– Data: harmonized inflation rate in Spain (September), manufacturing sales in Canada (August)
– United States: Initial Unemployment Claims (October), 4 Week Average Unemployment Claims, PPI (September), New York Fed Treasury Buys 22.5 to 30 years, T-Bill auction 4 and 8 weeks
– Central banks: Bowman, Bostic, Barkin, Bullard, Daly and Harker from the Fed, Elderson from the ECB and Tenreyro and Mann from the BoE speaking
– Income: UnitedHealth (NYSE :), Bank of America (NYSE :), Wells fargo (NYSE :), Morgan stanley (NYSE :), Citigroup (NYSE :), US Bancorp (NYSE :), Walgreens Boots Alliance (NASDAQ :), Fast Retailing, Domino’s Pizza.
Chart: China Factory Door Inflation Rises Again – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkmaygvq/PPI1410.PNG