Likely to be busy markets with consumer inflation figures from Germany, UK and USA this week allied to BoE, ECB and FED rate decisions all of which are expected to see rises.
The US CPI is expected to see a moderation to 7.3% which in turn may be influencing the size of the expected rate increase by the FED to 0.5% but we should keep in mind that Powell has said more than once that the pace and size of increases may slow but that the peak rate may be higher than the market expects.
In Sterling a rate rise of 0.5% is expected although there are fears that this may tip the UK into a recession (its technically in one at the moment) and the unemployment data is expected to show a modest rise. Its good that production data isn’t out for the UK since there are more than one sector out on strike (postal workers, paramedics etc etc) which isn’t likely to help retail sales either at a critical time of the year.
The ECB are somewhat behind the other two central banks with rates but they do are likely to moderate the size of the rates to 50pbs.
Last week wasn’t a good one for stocks or oil although for different reasons. Stocks suffering as PPI showed a slightly higher number than expected and thus fears for “higher for longer” in US rates heightened and also the feeling that when we start to see rate reductions may not be fast enough to avoid a recession.
Oil lost some 10% over the week adopting a bit of a “schizophrenic” view on China unwinding some COVID restrictions on one hand this should increase oil demand and thus pricing but on the other the expectations of higher infections in China as a result of the reduction in restrictions. Overall I think the market is holding long positions in energy and not seeing momentum topside is giving up on those positions with year end close at hand.
Other seemingly oil bullish news: OPEC sticking to production drops, Keystone pipeline shutdown and Putin threatening further output cuts was overwhelmed by global growth worries.
The US$ ended the week on a weaker footing against most majors on a muting on rate increase speed.
Metals had a good week as they took Chinese COVID restriction as a positive and noted low stocks.
Date | Country | Figures | Expected | Previous |
December 12 | GBP | Manufacturing Output YY | -5.4% | -5.8% |
December 13 | GBP | Unemployment | 3.7% | 3.6% |
| Germany | CPI Final | 10% | 10% |
| USA | CPI YY | 7.3% | 7.7% |
December 14 | GBP | CPI YY | 10.9% | 11.1% |
| USA | FOMC Rate announcement | 4.5% | 4% |
December 15 | GBP | BOE Rate decision | 3.5% | 3% |
| EUR | Rate Decision | 2.5% | 2% |
| USA | Retail Sales MM | -0.2% | 1.3% |
| USA | Jobless Claims | 230K | 230K |
December 16 | GBP | Retail Sales YY | -5.7K | -6.1K |
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