Financial Markets Daily Report15 November 2023
Financial markets rallied globally following lower-than-expected US consumer prices. October CPI was unchanged m/m from September (vs. 0.1% expected) and rose 3.2% y/y (vs. 3.3% expected), down from September’s 3.7%. The market now expects the Fed to cut rates in May, ahead of June as was priced before the release of inflation data.
- Financial markets rallied globally following lower-than-expected US consumer prices. October CPI was unchanged m/m from September (vs. 0.1% expected) and rose 3.2% y/y (vs. 3.3% expected), down from September’s 3.7%. The market now expects the Fed to cut rates in May, ahead of June as was priced before the release of inflation data.
- In this context, US treasury yields fell sharply (-19 bps on the short and long end of the curve), with the 2Y which was stuck above 5% touching 4.84% and the 10Y falling below 4.5%. The trend spread to the euro area where sovereign bond yields lost more than 10 bps and periphery economies’ risk premia shortened.
- The main stock indices posted gains above 1% led by interest-rate sensitive tech giants. The US dollar fell against major currencies, leaving the euro around $1.08. In commodities markets, gas and Brent prices were mostly unchanged. Today, US october retail sales will be on the spotlight, giving further clues of the state of the economy.