Rates rose across the board from USA, UK, Europe and Australia as expected and although a relatively quiet market with holidays coming up and year end we do have the FED’s favoured inflation indicator in the PCE at the end of the week and the market sees it lower with inflation muting.
The FED reiterated higher rates for longer (peaking at 5.1%) which dampened the markets and we moved towards the “world recession mode” again.
Indeed figures from the USA and Uk both showed a slowing of industrial output and in the case of the British poor retail sales as well.
The market remains pessimistic towards the UK economy with multiple services suppliers: nurses, post office, train drivers all on strike all of which doesn’t particularly help that mood.
The Japanese do have a rate decision to make but even with inflation close on 4% they should stay at 0.1% ( the only G20 to do so….) assuming this to be correct then USD YEN rate is likely to remain elevated and the Japanese will attempt to use weak currency policy to bolster exports.
The US clawed back some of its lost sparkle against the G7 currencies but the market is somewhat subdued and most speculators are done for the year so reaction to outlying data is likely to be disproportionate but think the US will hold these levels as year end US demand is possible.
Commodities had mixed but ultimately closed lower on the week – oil rallied on a hoped for Chinese recovery in demand but then looked West at other economies and feared for demand from that part of the globe. The most sensitive to China: Copper looked string for beginning of the week then fell away as hope gave way to reality.
Gold and silver held up on investment but if the metal was regarded as anything industrial in nature it slid on the week.
Date | Country | Figures | Expected | Previous |
December 19 | GER | IFO Business Climate | 87.4 | 86.3 |
December 20 | Japan | Interest Rate Decision | -0.1% | -0.1% |
| USA | Building permits | 1.483M | 1.512M |
December 22 | GBP | GDP Growth Rate | 2.4% | 4.4% |
| USA | Initial Jobless Claims | 225K | 211K |
December 23 | USA | Durable Goods | -0.5% | 1% |
| USA | PCE YoY | 5.5% | 6% |
| Japan | Inflation Rate | 3.9% | 3.7% |
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