Consumer Inflation, Crypto Deflation | Reuters
A look at the day ahead in US and global markets from Mike Dolan.
Wall St was jittery after this week’s inconclusive US midterm elections, but Wednesday’s steep market losses were as much due to the implosion in cryptoassets, serious problems in the tech sector and fears ahead of Thursday’s key US inflation update.
Annual consumer price inflation is expected to have slowed slightly last month to 8.0%, the lowest since February, with core inflation rates ticking down to 6.5%. Falling used car prices, an aggravator of inflation indices over the past year, will be closely watched – as will the relative calm in oil prices.
Oil extended losses on Thursday for a fourth day as renewed COVID curbs in China raised concerns about fuel demand in the world’s biggest crude importer. Hurricane Nicole also weakened to a tropical storm as it headed over Florida toward Georgia.
But for all the excitement in the markets surrounding the inflation release, any hope that the one-month data will change the Federal Reserve’s tightening course took a beating.
Minneapolis Fed President Neel Kashkari said it is “far too early” to discuss any pivot away from the Fed’s current policy course. “We’re on the right track right now: I think we’re united in our commitment to get inflation back to 2%.”
That tightening will not help the doom and gloom in the crypto world.
Cryptocurrencies faltered on Thursday after a week of eye-popping losses and existential fears for the entire sector as crypto exchange FTX faces collapse now that rival Binance has walked away from a last-minute bailout. Bitcoin , which has seen more than a quarter of its value disappear since Saturday, fell below $16,000 for the first time in two years before stabilizing just above that level early Thursday.
Broader markets were flat to negative around the world, mostly in a holding pattern ahead of the inflation report.
Given the extent to which Russia’s invasion of Ukraine this year turned the world’s energy, inflation and economic fortunes for the worst, investors were watching battlefield developments and reports of “talks about talks” very closely.
In a major development on Wednesday, Moscow ordered troops to withdraw from near the strategic southern Ukrainian city of Kherson in one of the biggest setbacks of the war so far – although Ukraine said it was doubtful Russian troops would leave without a fight.
Reports of some movement towards negotiations come ahead of the G20 summit in Indonesia next week. Russian President Vladimir Putin will not be at the summit in person, but host Indonesia said Thursday he may join a session virtually.
The US and China also posted markers this week ahead of an expected meeting between their presidents at the summit.
However, Chinese stocks fell again – mainly on COVID concerns. Chinese authorities should take a more targeted approach to tackling Covid outbreaks and avoid extra “layers” of measures, state news agency Xinhua reported, as cities fell under tighter curbs as new cases spread.
In Japan, the yen held steady after Bank of Japan Governor Haruhiko Kuroda said any future debate about an exit from the central bank’s ultra-loose monetary policy would focus on the rise in short-term interest rates and adjustments in the bank’s massive. balance.
In banking, shares in Credit Agricole ( CAGR.PA ) fell 4% after the French bank missed third-quarter earnings estimates, driven by weaker trading revenue and withdrawals at asset manager Amundi.
Key developments that could give direction to US markets later on Thursday:
* US Consumer Price Index for October, Weekly Jobless Claims, Oct Federal Budget
* New York Federal Reserve President John Williams, Fed Board Governor Christopher Waller, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan, Kansas City Fed President Esther George all speak
* US Treasury auctions 30-year bonds
* Income from American companies: Ralph Lauren, Tapestry etc
* Bank of Canada Governor Tiff Macklem speaks
By Mike Dolan – [email protected], @reutersMikeD; editing by Andrew Heavens
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