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