JJ Fdez- Figares (Link Securities) | As we expected, the publication of the US CPI for the month of November was crucial for the future of Western financial markets in yesterday’s session., Thus, due to a slightly better reading than expected from analysts’ consensus, a Rally European and US bond and stock markets found relief, closing higher yesterday, while the dollar declined sharply against other major currencies, hitting its lowest level in nearly six months. yes ok US inflation readings welcome -The Normal was at its lowest level since December 2021 nearly a year ago-, Both the Normal and its underlying are well above the Federal Reserve’s (Fed) target of 2%. Too, Most of the decline in this variable was due to a decline in commodity prices, with many due to the correction experienced by raw material prices., including energy, and to solve a great deal of the problems plaguing global supply chains. However, inflation and wages in the services sector continued to rise during the month, which is what really worries the Fed as it is the most difficult to combat.
it’s because of that We do not believe that yesterday’s data is significant enough for the members of the Federal Open Market Committee (FOMC) to change their overall outlook on inflation today. And on its actions in terms of the US economy and, therefore, monetary policy. Furthermore, we understand that the last thing the Committee wants at this juncture is to ease financial conditions in the country, something that is happening as bond prices rise and their yields fall, leading to We expect Fed Chairman Jerome Powell to keep a firm line on the fight against inflation, a line that many investors may not like too much, Those who are already starting to discount changes in the country’s monetary policy in 2023. Investors on Wall Street must have had some apprehension yesterday afternoon, as the market’s main indexes, after starting the session with strong gains, were slowly losing ground. , turning positive by the end of the day but far from the day’s highs.
a) yes, We expect today the FOMC to announce a new increase in its reference interest rates, which will be “only” 50 basis points, as Powell telegraphed in recent statements. However, it will be important to know how much the US central bank intends to raise its official interest rates before completing the hike process. A reference to their intentions would be what the various members of the FOMC point to in dot diagrams, in which they draw how they expect official rates to behave in the coming years. It will also be interesting to watch the new macro chart published by the Fed to see how the institution’s analysts’ expectations for managed growth and inflation have evolved in recent months.
But all this will be known in the afternoon, European stock markets are already closed, so we expect that for this reason, investors in these markets will till then choose the option of discretion, which will condition the activity during today’s session, Which we hope will be reduced. To start, We are betting on the opening of the European stock markets today without major changes and without a defined trendWith investors very attentive to the behavior of futures of major US stock indices and bond yields as well as to the behavior of other variables such as the dollar or other variables crude oil price, With respect to this last variable, note that, After falling close to 11% last week, it has recovered just over 6% in the past two days, encouraged by worsening weather conditions in Europe and the US.That will increase fossil fuel consumption, and the reopening of the Chinese economy, which everything indicates will proceed more quickly than initially expected.