The market has moved from inflation fears to a belief that stagflation is a more likely outcome. Stagflation is high inflation coupled with low economic growth and thus any glimmer of hope as in the recent drop in initial jobless claims will cause risk assets to appreciate. US PPI came in 0.3% less than expected so allowing the markets some breathing space from its worries.
But we still have a fair few worker strikes in the States to prevent any complacency over wage inflation.
The major data this week is UK centric and is retail skewed with retail sales expected to show some recovery, but the market will also watch the inflation related data.
China economy is also stuttering – GDP previously growing at nigh on 8% is now under 5%; this as a result of port disturbances and localised covid lockdowns. The figures have put a possible lid on the metals after coppers 12.5% rally but the retreat thus far is still above technical support. Additionally the factors that drove metals higher: high extraction costs through higher energy prices and transportation bottlenecks haven’t gone away.
Oil continues to rise which appears to more speculative in nature however the spread between Brent and WTI has also widened showing a tightness in European markets.
Date | Country | Figures | Expected | Previous |
Oct 20 | GBP | Consumer Price Index (MoM Sep) | 3.2% | 3.2% |
| GBP | Producer Price Index (MoM Sep) | 0% | 0.4% |
| GBP | Retail Price Index (MoM Sep) | 0.2% | 0.6% |
| EUR | Consumer Price Index (MoM Sep) | 0.5% | 0.4% |
Oct 21 | USA | Initial Jobless Claims |
| 293K |
Oct 22 | GBP | Retail Sales (MoM) | 0.5% | -0.9% |
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