Article Hero

The CPI report beats expectations, reveals an inflationary surge – Market Overview

1623404039.png
Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Yesterday, May’s CPI report was published, showing a rise above the forecasts up to 5% in the general inflation figure. The Core CPI figure also rose to 3.8%, well above the Fed’s target.

The market’s reaction was minimal, indicating that investors still need to see the results for the next months before knowing for sure whether there is an inflationary rebound or not. The yield of Tnote initially reacted slightly higher (jumping 1.52%) but ended up falling significantly to 1.43%.

No changes in the ECB's monetary policy: repo rate remained at 0%, while the deposit rate remained at -0.5%, reiterating that rates will remain at current levels or even lower until inflation approaches the central bank’s target. This target seems far away, as inflation figures are well below those recorded in the United States.

The global amount of the debt purchase program to counter the pandemic remains at 1.85 billion euro, with an end date in March 2022, but with wide flexibility so that it could be reviewed at any time. President Lagarde said that she considers it premature and unnecessary to start withdrawing monetary stimuli. However, several ECB members were already in favor of beginning the process of reducing the purchase of assets. So, the possibility of this happening remains open, and everything will depend on the upcoming data on economic growth. This could be positively affected once the NextGeneration fund, planned for the coming weeks, is implemented. The economic projections of the ECB's economic team were more optimistic and increased growth forecasts.

The euro has not experienced any significant change after the result of the central bank meeting was known. EUR/USD continues to evolve in a narrow trading band from last week between 1.2150 and 1.2190.

Sources: investing.com, reuters.com.

This information prepared by capex.com/za is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of capex.com/zaJME Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.

Share this article

How did you find this article?

Awful
Ok
Great
Awesome

Read More

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.