Mixed US inflation data last week

Mixed US inflation data last week

Last week, US stocks bounced back strongly from the previous week’s decline, although Small-Caps underperformed again. European and UK stocks put in a much more muted performance.

US consumer inflation data came in higher than expected last week. CPI for December came in at 3.35%, up from 3.14% in November (a 5-month low), and above forecasts of 3.2%. Following the data there were comments from Fed members suggesting that it is too soon to think about cutting rates – even so, the market is pricing in a 70% chance that the Fed will cut in March (this was previously 90%).

In contrast, Friday’s US producer price inflation data came in surprisingly lower than expected pointing to easing inflation.

US banks kicked off fourth-quarter earnings season on Friday.

In Europe, ECB President Christine Lagarde suggested in an interview that rates had probably peaked, and regarding the fight against inflation she added that “the worst part is behind us“.

In the UK, data showed that the economy grew by 0.3% in November, slightly more than expected. The yield on the 10-yr Gilt reached its highest level in a month last week and edged higher after the data.

US Risk Barometer 12th January 2024

Europe Risk Barometer 12th January 2024

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