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WTI Crude Oil Price Remains High: CPI Report in Focus Today

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Miguel A. Rodriguez
Miguel A. Rodriguez
12 January 2023

According to market consensus, today's December CPI report will show prices rising 6.5% year-on-year, down from 7.1% in November. 

The US and European stock markets continued to rise yesterday as investors waited for today's release of the US Consumer Price Index. The December Consumer Price Index could indicate how far the Federal Reserve needs to go with its rate hikes to stamp out inflation. The market's consensus is that the Federal Reserve will continue raising interest rates at a slower pace than it has been doing so far.  

 

In fact, the interest rate futures market is betting on a rise of only 25 bps at the next Fed meeting. In any case, the main thing investors need to know is what the terminal interest rate will be at the end of this process of tightening monetary policy. Now, the consensus is around 5.10%. The Fed has indicated that it will continue to raise rates and keep them higher for longer until it is convinced that inflation is on a sustainable path toward its 2% target. 

 

In recent days, market sentiment has been that a slowdown in the pace of rate hikes and an eventual pause by the Federal Reserve will stop weighing on the stock market, particularly technology stocks, which have been the most affected by monetary policy tightening. So, it has been reflected in how the market has done since the beginning of the year, with shares rising slightly. This is especially true after the number of average hourly earnings was released in the non-farm payroll data last Friday, which showed a clear slowdown in the pace of wage increases, which could prevent the Federal Reserve from raising interest rates. 

 

According to market consensus, today's December CPI report will show prices rising 6.5% year-on-year, down from 7.1% in November.  

 

The market for energy raw materials is still under pressure. Oil, in particular, is under pressure because of predictions that the world's demand for crude oil will go down. The International Energy Agency's inventories were released yesterday, and the accumulation of stocks far outstripped expectations.  

 

WTI oil, on the other hand, remained at the day's highs, indicating that after the continuous price falls in recent months, WTI oil is at oversold levels from a technical standpoint and thus could see corrections to the area slightly above $80. 

Sources: Bloomberg, Reuters 

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.