All articles tagged with #us cpi
Gold prices slightly declined as US inflation data showed a softer-than-expected increase, reducing its appeal as an inflation hedge, though support from a higher unemployment rate limited losses. Silver retreated from record highs, while platinum and palladium reached multi-year highs due to strong demand and supply concerns.
The US and China agreed on a framework to implement previously agreed tariffs, but the announcement has not generated much enthusiasm in Asian markets, with risk FX showing cautious activity amid ongoing tariff disputes and upcoming US CPI data. The US dollar is slightly stronger, and market sentiment remains cautious ahead of key economic indicators.
The upcoming US core CPI report on Wednesday poses a challenge for long positions in the bond market, with expectations of stable inflation figures potentially limiting bullish sentiment on Treasuries. Despite a year of decent returns, mutual funds are reducing long-dated securities ahead of year-end. Meanwhile, the European Central Bank is expected to cut rates, with markets pricing in further reductions into 2025, although long-term uncertainties remain. Near-term volatility in EUR rates has decreased, but geopolitical and economic factors could drive future rate movements.
Bitcoin and major altcoins are trading weak ahead of the U.S. CPI release, with Bitcoin falling below $69,000 and experiencing a 2.5% drop. Ether, Solana, Cardano, and Dogecoin also saw losses, while BNB Chain was the only token in the green. Analysts warn of potential volatility following the U.S. consumer price index release, but some believe that the bitcoin correction may be over as selling pressure from long-term wallets cools down and demand for spot bitcoin increases.
Bank of America anticipates a moderation in core CPI inflation for March, with a projected 0.2% month-on-month decrease, while the headline CPI is expected to slightly increase to 0.3% month-on-month. These outcomes could bolster the Federal Reserve's confidence and potentially pave the way for a rate cut in June, aligning with market predictions. However, a significantly stronger inflation report may pose risks to this outlook, potentially delaying the commencement of the rate-cutting cycle.
CIBC analyzes the February US CPI report, noting that while the data exceeded expectations, it does not warrant immediate concern about inflation. Core CPI rose by 0.4%, indicating persistent inflation pressures, particularly in core services and goods. This data diminishes the likelihood of immediate rate cuts by the Fed, but CIBC anticipates a potential shift towards easing policy in the latter half of the year, contingent on forthcoming economic data.
The U.S. Consumer Price Index unexpectedly rose to a 3.2% annual pace in February, slightly surpassing estimates, while the core rate, excluding food and energy costs, also increased to 3.8%. This data has led to a shift in market expectations for interest rate cuts, with the first anticipated cut now pushed out to the summer. Despite the hawkish change in monetary policy outlook, bitcoin saw a slight increase in price following the release of the CPI data, and traditional markets experienced modest selloffs in U.S. stock index futures and bonds, along with a slight rally in the dollar.
This week's market outlook includes key events such as UK unemployment rate and average earnings, US CPI and PPI reports, US retail sales, jobless claims, and the PBoC MLF rate decision. Weak UK wage growth may prompt rate cut expectations, while US data could influence rate cut expectations. Additionally, the PBoC is expected to keep the MLF rate unchanged amidst better-than-expected Chinese inflation data.
The US dollar traded cautiously ahead of the release of the January consumer price index statistics, with the market awaiting the potential impact on key financial assets. Gold prices lacked directional conviction, with resistance at $2,065 and support at $2,005. USD/JPY consolidated above support at 148.90, with resistance at 150.00 and a potential pullback towards 147.40. GBP/USD staged a moderate comeback, consolidating above the 1.2600 handle, with resistance at 1.2675 and support at 1.2565.
The upcoming US CPI report is expected to show a y/y reading of 2.9%, down from 3.4% in December, with core CPI slowing to 3.7% y/y from 3.9%. The market may focus on core CPI, and a 0.1 pp beat could impact US 10s and the dollar. The report will provide insight into the Fed's philosophical stance on inflation and interest rates, with the market currently pricing in a 71% chance of a rate cut on May 1, potentially stretching out until June.
The US benchmark CPI for December has been revised to +0.2% from +0.3%, with the core six-month annualized CPI down to 3.0% from 3.3%, a key metric for the Federal Reserve. The US dollar initially decreased on the CPI revisions, reflecting relief that the revisions weren't higher. Federal Reserve Chair Powell emphasized the importance of these changes and highlighted the upcoming January CPI report and revisions for 2023, which are expected to show a drop in the year-on-year reading to 2.9% from 3.4%.
Goldman Sachs anticipates minor revisions to the US Consumer Price Index (CPI) for the second half of 2023, with historical trends suggesting adjustments reflecting the significant inflation slowdown over the year. The Bureau of Labor Statistics' annual revision process aims to recalculate seasonal factors, potentially leading to a slight upward adjustment in monthly core CPI inflation figures. Similar directional revisions are expected for core Personal Consumption Expenditures (PCE) inflation, with the data set to be released at 8:30 am US Eastern time.
Federal Reserve Chairman Jerome Powell is closely watching the scheduled revisions to the US Consumer Price Index (CPI) due next month, hoping they confirm the progress seen in inflation. The revisions, potentially changing the inflation picture for 2023, will be crucial for policy decisions. The upcoming January CPI report and revisions for 2023 are expected to impact interest rates, with a higher CPI potentially leading to higher rates for longer. Powell is particularly concerned about core services inflation and hopes for a downward revision, which would alleviate the Fed's worries.
Asian stocks, particularly in Japan and Hong Kong, saw gains as investors awaited US inflation data to gauge Federal Reserve policy. Japanese share gauges were set to reach three-decade highs, partly due to the yen's weakness and a new tax-free retirement savings program.
The US consumer price index (CPI) is expected to remain unchanged in November, according to Bloomberg Economics. This gives the Federal Reserve room to consider lowering interest rates in the future, as energy prices have declined. While prices excluding food and energy may have risen faster than in October, the overall CPI is expected to stay flat.