October 2, 2022
Markets rise, but wait for US employment data to gauge interest rates

US markets are trying to recover after yesterday’s storm

BARCELONA, Spain – An unexpectedly high reading of August inflation in the United States prompted markets to reassure markets that the Federal Reserve (Fed) will raise interest rates by 0.75 percent next week. Wall Street then began weighing the possibility that the Fed might make a choice More aggressive monetary policy maneuvering. The odds of a full point increase increased by more than 20%.

💦 Cold water bucket. A higher-than-expected rate hike in the U.S. represents a veritable bucket of cold water for the market, as bets that inflation has already hit the ceiling have started to steer investors into riskier assets. Yesterday’s data dragged US stocks to a two-year low.

🦑 Inflation with tentacles. The Consumer Price Index is stable and ubiquitous. But today, in England, it has fueled hopes that it may be peaking. British inflation retreated slightly from its four-decade high, to 9.9% in August from 10.1% in July. Economists’ consensus was for a rate of 10%.

The reading eases pressure on the Bank of England (BoE). Prime Minister Liz Truss announced plans to freeze a rise in energy tariffs in October, a move economists say will reduce a new spike in prices this winter.

🇺🇸 Shopping again. At least for now. An apparent calm returned to US markets after yesterday’s strong storm, with the S&P 500 losing more than 4% and the Nasdaq falling more than 5%. US index futures rose, but the move among European stocks was volatile. One of today’s key catalysts is the US producer price index. Premiums on 10-year US Treasuries rose to their highest level in a decade.

→ Read on breakfastA newsletter from Bloomberg Line: Inflation, trigger of crises in LA

🟢 Yesterday Bags: Dow Jones Industrials (-3.94%), S&P 500 (-4.32%), Nasdaq Composite (-5.16%), Stoxx 600 (-1.55%), Ibovespa (-2.30%)

Stronger-than-expected inflation data in the U.S. was the trigger for a strong selling move in stock markets as they reinforced the central bank’s bid to be more aggressive in its fight against high prices. On Wall Street, in the case of the tech-heavy Nasdaq 100, stocks fell as much as 5.2% for their worst performance in two years. The U.S. CPI rose 8.3% year-over-year in August, beating economists’ average estimate of 8.1%. The relaxation in fuel prices was not enough to further reduce US prices.

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On the agenda

This is the scheduled schedule for today:

America: USA (IPP/Aug), International Energy Agency (IEA) Monthly Report, Crude Oil Stocks, 30 Year Mortgage Applications – MBA

Europe: Speech by Ursula van der Leyen, President of the European Commission. United Kingdom (CPI and PPI/August, Nationwide House Price Index)

Asia: Japan (Industrial Production/July; Installed Capacity Utilization/July, Trade Balance/August)

Latin America: Brazil (Retail Sales/July, Consumer Confidence/Sep); Argentina (IBC/August)

Central banks: This is Philip Lane, Elizabeth McCall and Andrea Enria, all from the ECB.

📌 per week:

the fifthAmerica

Friday: Eurozone (CPI); USA (Consumer Sentiment – University of Michigan); China (household sales, retail sales, industrial production, unemployment rate)

(With information from Bloomberg News)