A look at the day ahead in European and global markets from
Anshuman Daga
Today's inflation numbers from the world's biggest economy
on Valentine's Day will be one of the most important economic
data watched by markets.
While blockbuster January jobs data has forced some market
participants to grudgingly accept that the peak is not yet near
for interest rates, investors are still hopeful that the Federal
Reserve could begin cutting rates later this year.
As Toronto-based independent proprietary trader Kevin Muir
said: "I don't know if it will be this release or the next one,
but I suspect the market has accepted the return to inflation
normalcy a little too eagerly."
"There appears to be little fear about a lingering inflation
problem. Sure, there are a few pundits warning about inflation,
but the market is clearly screaming at the top of its lungs that
inflation worries are misplaced."
The market expects rate increases to ease despite Fed Chair
Jerome Powell acknowledging last week that rates may need to
move higher than expected if that sort of economic strength
threatens the Fed's progress in lowering inflation.
Economists polled by Reuters expect Tuesday's CPI reading to
show headline prices and the core CPI gaining 0.5% and 0.4%
month-over-month for January, respectively. However, some
recalibrated their expectations on Monday for a slightly lower
CPI.
Asian shares edged up on Tuesday, while the yen recouped
losses as Japan nominated a new central bank governor.
Adding to the positive momentum, sources said that U.S.
Secretary of State Antony Blinken is considering meeting top
Chinese diplomat Wang Yi at the Munich Security Conference
starting this week.
This would mark their first face-to-face talks after the
United States shot down what it said was a Chinese spy balloon
and other flying objects.
Meanwhile, the deep freeze over UK assets is thawing.
After last year's upheaval, Britain's stocks and bonds are
drawing strong investor interest, with the FTSE 100 stock index flirting with record highs as the bourse benefits from
global trends such as the reopening of China's economy and
strong energy prices.
Ten-year government bond yields have fallen 27 basis points
so far in 2023 to 3.4% in one of the biggest
declines in government financing rates among the Group of Seven
most advanced economies.
A Reuters poll published on Tuesday showed that the Bank of
England will make its final increase to borrowing costs in the
current cycle next month to combat double-digit inflation, while
the economy is almost certainly entering a recession.
In Italy, Prime Minister Giorgia Meloni and her coalition
allies scored emphatic election wins in the two wealthiest
regions of the country, strengthening the right's grip on power.
Meanwhile, Qatari investors are preparing to make a bid to
buy Premier League club Manchester United in the coming days,
Bloomberg reported.
Key developments that could influence markets on Tuesday:
European economic data: Euro zone flash Q4 GDP, UK Dec jobs,
Jan unemployment count
U.S. CPI data due: Jan CPI - core CPI forecast at +0.4% from
+0.3% in Dec, +5.5% year-on-year from +5.7%
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The Fed waits on services UK assets bounce back ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Anshuman Daga; Editing by Jacqueline Wong)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.