Erratic post US CPI as assets classes whipsaw

Macroeconomic/ geopolitical developments

• US core consumer price index (CPI) inflation hit at four-decade high, at 6.6% year-over-year, higher than consensus.

• Earnings season began, with US financials leading the way, overall posting above expectations.

• In the UK, the U-turns continue on the much-criticised mini budget, with the chancellor of the exchequer, Kwasi Kwarteng a political casualty, as PM Liz Truss appointed Jeremy Hunt to the position.

Global financial market developments

• The major US stock averages dipped and surged Thursday, then setback again Friday.
• The S&P 500 dropped 2.4% Thursday and then closed up 2.6%, the fifth largest intraday reversal from a low in the history of the S&P 500, and the fourth largest for the Nasdaq.

• Friday losses, however, surrendered much of Thursday’s gains.
• European equity indices were erratic too, closing little changed on the week
• US 10yr yields were higher again!

• US Dollar strengthened again, as DXY closed at a new multi-decade peak.
• GBPUSD consolidated gains since rebound from a record low.

• Gold plunged reversing the prior week’s rebound from a multi-month low at the end of September, sets up negative

• Oil has sold off after a surge before and then in the wake of the OPEC+ production cut decision, pointing back towards the multi-month low from the end of September.

• Copper is in a consolidation pattern.

Key this week

• Central Bank Watch: We get the Reserve Bank of Australia (RBA) Meeting Minutes on Tuesday and People’s Bank of China (PBoC) interest rate decision on Thursday.
• Macroeconomic data: Data is light, main focus will be the release of UK and Canada CPI on Wednesday.
• Earnings data: Earnings season has kicked in, we get Bank of America, J&J, Netflix, Tesla, and P&G this week.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued