Inflation-adjusted personal spending rose 0.2% last month after a downward revision of 0.3% in September. The core price index for personal consumption expenditures, which excludes the volatile components of food and energy, rose 0.2% last month. On a year-on-year basis, the Fed's preferred indicator of underlying inflation rose by 3.5%. The data was in line with expectations. Even though the data is not great and certainly does not show the rapid cooling of inflation like in the Eurozone or the UK, it could be interpreted as Fed-friendly. At the same time, there is no reason for additional optimism that the Fed could see enough signs that inflation is cooling back to the target range – hence we see little reaction in the markets and also in the USD.
Inflation in the Eurozone cooled more than expected, coming in at 2.4% (vs. 2.7% expected), putting the 2% target within sight. As we predicted earlier this week, investors will be increasingly betting that the ECB will cut rates sooner than officials indicate – I personally see ECB rate cuts closer than Fed rate cuts – which would mean that the EUR/USD will come under some pressure again and the recently recovering EUR will weaken somewhat.
The sharp fall in inflation in the Eurozone is primarily a sign of weak consumer and corporate demand – but markets are not seeing this.
OPEC+ is discussing additional production cuts of around 1 million barrels per day in order to overcome internal disagreements and support weakening crude oil prices. We see oil prices higher today – but the cut will not be enough to make oil bullish again. Instead investors will be more concerned about weak oil demand in the coming sessions. We see little upside potential for oil now but we may act in case of sharp dips or spikes.
In pre-market trading in the US, we see higher yields, which will help the USD to trim recent sharp losses and provide some headwinds to growth stocks. Overall, however, we see markets still waiting for more clues (e.g. Fed Chair Powell's speech tomorrow) – we expect mixed markets in a sideways movement with renewed profit taking towards the end of today's session.
👁 ROB'S MARKET OVERVIEW:
November 30, 2023
🌐/🇺🇸 Global/US Markets ➡️/↗️/↘️ (remains in sideways – potentially some early gains hitting profit taking at end of session)
Cyclical Stocks ↕️
Tech/Growth Stocks ➡️/↗️/↘️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ↗️/↕️ (gains with profit taking waves)
Materials Stocks ↗️/➡️
CAD, CHF ↗️/➡️
GBP, AUD ↘️/➡️
⚒ Commodity Markets ↕️
Oil prices ↕️/↗️ (benefiting from OPEC+ production curb expectations; oil remains bearish)
Natural Gas prices ↕️/↗️ (recovering after recent sharp losses)
Metal prices ➡️ (weak Chinese economy continue to weigh on metal prices)
Gold ➡️ (faces slight resistance due to slightly higher yields; gold remains bullish)
⚡️Cryptos ➡️/↗️ (remains bullish as rate cut hopes intact)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)