Morning Auction: Consumer Inflation, Crypto Deflation

Morning Auction: Consumer Inflation, Crypto Deflation

A preview of the day ahead in US and global markets by Mike Dolan.

Wall St shuddered after the indecisive U.S. midterm elections this week, but Wednesday’s steep market losses were just as much due to the implosion of crypto assets, serious problems in the tech sector and apprehension before the Thursday’s key US inflation update.

Annual consumer price increases are expected to have eased slightly last month to 8.0%, the lowest since February, with underlying inflation rates below 6.5%. Falling used-car prices, an aggravating factor in inflation indices over the past year, will be closely watched – as will the relative calm in oil prices.

Oil extended losses Thursday for a fourth day as new COVID restrictions in China raised concerns about fuel demand from the world’s biggest crude importer. Hurricane Nicole also weakened into a tropical storm as it tracked over Florida toward Georgia.

But despite all the tension in the markets over the inflation release, any hope that the month-on-month data will alter the Federal Reserve’s tightening course has been rebuffed.

Minneapolis Fed President Neel Kashkari said it was “entirely premature” to discuss any changes to current Fed policy. “We are on the right track at the moment: I think we are united in our commitment to bring inflation down to 2%.”

This crunch will do nothing to help the doom and gloom in the crypto world.

Cryptocurrencies tumbled on Thursday after a week of eye-popping losses and industry-wide fears as crypto exchange FTX faces collapse now that rival Binance has walked away from a bailout of last minute. Bitcoin, which has seen more than a quarter of its value disappear since Saturday, fell below $16,000 for the first time in two years before stabilizing just above that level early Thursday.

Broader markets were flat to negative across the globe, mostly in a holding pattern ahead of the inflation report.

Given the extent to which Russia’s invasion of Ukraine this year has turned the world’s energy, inflation and economic fortunes for the worse, investors were watching developments in the field very closely. battle and reports of “talk upon talk”.

In a major development on Wednesday, Moscow ordered troops to withdraw near the strategic southern Ukrainian city of Kherson in one of its biggest setbacks in the war so far – even if Ukraine said it was doubtful that Russian troops would leave without a fight.

Reports of a move towards negotiations ahead of the G20 summit in Indonesia next week. Russian President Vladimir Putin will not be at the summit in person, but the Indonesian host said on Thursday he could attend a session virtually.

The United States and China also laid milestones this week ahead of an expected meeting between their presidents at the summit.

However, Chinese stocks fell again – largely amid COVID concerns. Chinese authorities should take a more targeted approach to tackling COVID outbreaks and avoid additional “layers” of measures, the official Xinhua news agency reported, as cities reeled under tighter restrictions as new cases were spreading.

In Japan, the yen held steady after Bank of Japan Governor Haruhiko Kuroda said any future debate over an exit from ultra-accommodative central bank monetary policy will center on the pace of rate hikes. short-term interest rates and the bank’s massive monetary policy adjustments. balance sheet.

In banking, shares of Credit Agricole (CAGR.PA) fell 4% after the French bank missed earnings estimates for the third quarter, due to lower trading products and withdrawals at the Amundi asset manager.

Key developments that could guide US markets later Thursday:

* October US Consumer Price Index, Weekly Jobless Claims, October Federal Budget

* New York Federal Reserve Chairman John Williams, Fed Board Governor Christopher Waller, Philadelphia Fed President Patrick Harker, Dallas Fed Chief Lorie Logan, Chief Kansas City Fed Esther George All Talk

* US Treasury Auctions 30-Year Bonds

* Profits of American companies: Ralph Lauren, Tapestry, etc.

* Bank of Canada Governor Tiff Macklem speaks

Inflation and US bond yields
Crypto deflation
Reuters Charts Reuters Charts
Reuters Charts

By Mike Dolan – mike.dolan@thomsonreuters.com, @reutersMikeD; edited by Andrew Heavens

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust.

#Morning #Auction #Consumer #Inflation #Crypto #Deflation

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