Jerome Powell said on Friday that “its time to taper…not time to raise rates…” admitting inflation could last longer. The market had already been making that decision seeing inflation being less and less transitory. In fact the markets are now pricing the first rate hike by June 22 and 1.5 hikes by Sep 22. The rise in yields sent stocks tumbling and took the shine off many of the commodities.
We are quiet on the data front across the globe this week as bar the European CPI on Friday there is no other inflation data. The ECB rate decision on Thursday is unlikely to move on interest rates however the market will look for signs that the COVID stimulus is coming to an end and when.
LME metals were looking as though they had seen the highs prior to Powell for example aluminium ended the week 11% off the high seen on Tuesday. Seemingly, although LME stock available is at the lowest for 20 years there is metal outside of the LME system which is being brought in; which in turn takes away some of the stress on prices. Additionally, coal prices started to fall, reducing costs of production for metals, driven partially by the Chinese government stating it will intervene in markets; which is not the first time this year the Chinese have stepped in, previously they have managed to restrain the markets short term but not longer term.
Oil prices remain elevated despite coal and gas price drops as there is supply tightness in the US however there is considerable speculator involvement in the oil market. At a conference in Riyadh there has much made of the fact that very little investment in new exploration and hydrocarbons are not down and out and thus tightness in supply is likely to be the result.
Date | Country | Figures | Expected | Previous |
Oct 26 | USA | Consumer Confidence | 108.8 | 109.3 |
Oct 27 | USA | Durable Goods (Sep) | -0.2% | 1.8% |
Oct 28 | USA | Initial Jobless Claims | 292k | 290k |
| EUR | ECB Rate decision |
|
|
Oct 29 | EUR | GDP (QoQ) | 1.9% | 1.9% |
| EUR | CPI (YoY) | 3.7% | 3.4% |
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