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General Market Analysis | 15 November 2023

Markets Explode after CPI Data – Nasdaq up 2.4%

It certainly was a calm before the storm yesterday as markets surged after weaker than expected CPI numbers in the US. All three major indices powered higher in the US as investors once again discounted any further hikes from the Fed, the Dow closing up 1.43%, the S&P up 1.91% and the Nasdaq rising 2.37%. US Treasury yields took a tumble, with the 10-year dropping 20 basis points on the day to hit 2-month lows and the 2-year lost 22 basis points, now down at 4.82%. The dollar was smashed across the board losing over 1% against the majors and Gold jumped 20 dollars on the day.

Fed Bets Change Again

The market is now pricing in a 50-basis point rate hike for the Federal Reserve by next July as US inflation data came out lower-than-expected and risk trades took off again, but some traders are somewhat wary of this reaction. On the face of it, this is good news for investors looking for the Fed to ease rates and stimulate the economy but when we look at the data, the misses were only 0.1% across the three headline prints, and year-on year CPI is still at 3.2%, way off the FOMC’s target 2%. Following hard on the heels of yesterday’s data are the PPI and Retail Sales numbers tonight and if these tell a different story to the market then we could see more volatility across the market, but for the moment it seems that investors are more than happy to take a glass half full approach.

Another Big Day Ahead for Markets

It is another big day head for traders as they continue to deal with the fall out of lower-than-expected CPI data out of the US as well as react to fresh data releases today. First up in the Asian session, Australian traders will be focused on the Wage Price Index data released early in the day which is swiftly followed by the latest Chinese Industrial Production number. The focus is once again on the UK when European markets open as they release their latest CPI update. However, the main event looks set to come in the US session yet again with the release of PPI, Retail Sales and Empire State Manufacturing Index numbers all scheduled for release at the same time.