U.S. CPI data for October were weaker than expected, indicating a slowdown in price pressures and strengthening expectations for the end of the interest rate hike cycle. Swap contracts showed that the Federal Reserve is expected to cut interest rates for the first time in June next year by 25 basis points, previously in July.
On Tuesday, U.S. CPI data for October was weaker than expected, indicating a slowdown in price pressures and reinforcing expectations for the end of the interest rate hike cycle. U.S. stock market futures and U.S. Treasury bonds rose, the U.S. dollar index plunged, the yen stayed away from a 33-year low, and oil prices continued to decline. In terms of individual stocks, Nvidia has been rising for 10 days in a row, marking its longest consecutive rise in seven years.
Swaps show the Fed is expected to cut interest rates for the first time by 25 basis points in June next year, after July.
FTSE China A50 Index futures rose 1% in overnight trading.
U.S. stock futures continued to rise, with Dow futures rising 1.06%, S&P 500 futures rising 1.37%, and Nasdaq 100 futures rising 1.72%.
Inflation is weaker than expected, U.S. stock futures rise, U.S. bonds rise
The latest inflation data released shows that due to a sharp slowdown in energy prices, the overall U.S. CPI cooled more than expected in October, and the core CPI also fell to the lowest since September 2021 more than expected. The market is further betting that the Federal Reserve will cut interest rates in 2024.
Futures on the three major U.S. stock indexes rose rapidly, with the blue-chip Dow futures rising 0.96%, the S&P 500 futures rising 1.19%, and the technology-focused Nasdaq 100 futures rising 1.55%.
The yield on the U.S. 10-year Treasury note fell and is now at 4.506%.
Lee Hardman, strategist at MUFG Bank Ltd. noted:
Challenging the market’s growing belief that the Federal Reserve and other central banks have completed their interest rate hike cycle would require a sharp upward surprise in today’s inflation data, which provides markets with an anchor of stability when interest rates are on hold.
In terms of individual stocks, Apple rose before the market due to its cooperation with Amazon. Nvidia will rise for the tenth consecutive trading day, the longest consecutive rising period in the past seven years. Nvidia previously launched the most powerful AI chip H200.
Dollar dives as yen moves away from 33-year low
The U.S. dollar index fell 70 points in the short term and is now at 104.9.
Traders are also paying attention to the impact of U.S. inflation data on the yen, which approached a 33-year low before narrowing its losses.
Japanese Finance Minister Shuni Suzuki has repeatedly warned this week that the government would react to excessive actions. USD/JPY trades around 151, on the verge of breaking below the key 151.95 threshold.
It is worth mentioning that later today, Federal Reserve Vice Chairman Philip Jefferson and Chicago Fed President Goolsby will speak.
Hedge funds short crude oil prices continue to plummet
According to media reports on Tuesday, data from the U.S. Commodity Futures Trading Commission (CFTC) showed that in the week ended November 7, short positions in crude oil increased by more than 20,000 contracts to 95,756 contracts, with bearish positions the highest since July this year. . Hedge funds meanwhile cut bets on higher oil prices for a sixth straight week.
Sentiment has weakened in recent weeks as the risk premium from the Israeli-Palestinian conflict faded as the outlook for global demand dimmed and U.S. supplies increased. Brent fell to its lowest level since July last week, rebounded on Monday and continued to fall, currently hovering around $82 per barrel.
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