FinancialMarkets 8 Things You Need To Know
Good Day, heavy week up ahead, Oil at critical levels, Fed Rate Decision, PMI numbers, FOMC statements and Non Farm Payrolls, get ready for a roller coaster ride this week.
UK Inflation
Inflation in UK stores fell to the lowest level in more than 18 months in another sign that
the cost-of-living crisis is starting to ease. Shop prices were 2.9% higher year-on-year in January
compared with a 4.3% annual increase in December, the British Retail Consortium said Tuesday.
That’s the lowest since May 2022 as retailers offered heavy discounts to attract shoppers.
Private Credit
The Bank of England is examining the potential for systemic risk in the $1.6 trillion private credit market. The rapid growth of the sector means policymakers are exploring a number of potential issues, said
Lee Foulger, the director of financial stability, strategy and risk at the BOE. In recent years investors and
borrowers have increasingly turned to private credit as sharp rises in interest rates, alongside global
conflicts and financial shocks, hit public markets hard.
EU Rates
The ECB won’t rush into lowering
interest rates to avoid undoing progress on inflation, according to Governing Council member Peter Kazimir, who said June is more likely
than April for a first move.
Luis de Guindos said better prospects for consumer prices will ultimately prompt officials to cut rates.
As for Mario Centeno, he told Reuters the ECB should lower rates sooner rather than later.
Some Economic
Data Last Week
Inflation data showed: December overall PCE price index +0.2% vs. Nov -0.1% and December year-over
year PCE price index +2.6% vs estimate and prior reading of +2.6%
Core PCE price index for December +0.2% (in-line with est. +0.2%) and vs. Nov +0.1% and the Dec yearover year PCE core +2.9% (vs. consensus +3.0%) and vs Nov +3.2%.
Pending Home sales for December climb 8.3% m/m, the highest reading since June 2020 and above the
consensus for up 2%; Dec. Pending Home sales fall 1.0% from previous year.
Oil Market Yesterday
Oil prices bounced back in early trade on Tuesday,
following a more than 1% drop the previous session,
as escalating geopolitical tensions in major producing region the Middle East fueled supply concerns.
The oil price gains also come ahead of a Federal Reserve rate decision, as the Federal Open Market
Committee starts a two-day meeting on Tuesday.
Policymakers are expected to hold interest rates
steady, but some investors believe the U.S. central
bank could drop its hiking bias. Lower interest rates
are positive for oil prices and could further boost
demand.
Portfolio investors recoiled from short positions in
U.S. crude futures and options in the most recent
week as depleting inventories around the NYMEX
delivery point underscored the risk of a squeeze on
deliverable barrels. Hedge funds and other money
managers purchased the equivalent of 46 million
barrels across the six most important futures and
options contracts over the seven days ending on
Jan. 23.
The main impact from the escalating tensions in the
Middle East and the threat to ships transiting the
Red Sea isn't on crude oil prices. It's refined fuels
that are most at risk. The missile attack on the product tanker Marlin Luanda on Jan. 26 by Yemen's Iran
-aligned Houthi group underscored the risks to shipments of refined products between the major trading regions of Asia and Europe.
MACRO Economics
The dollar held narrow ranges against its major
peers on Tuesday, as traders awaited the Federal
Reserve's monetary policy decision for clues on
when the U.S. central bank might cut rates.
U.S. stocks advanced on Monday as market participants looked ahead to this week's slew of megacap
earnings, economic data and the Federal Reserve's
monetary policy meeting.
U.S. Treasury yields slid on Monday at the start of a
busy week that includes potentially market-moving
jobs data and a Federal Reserve decision after the
Treasury Department said it would need to borrow
less than its previous estimates.
Gold prices were in a tight range on Tuesday as traders awaited the U.S. central bank's decision on key
policy rates and remarks from Chair Jerome Powell.
Key Market Data
Today / Tomorrow
All times are Eastern Time (EST). We focus on U.S economic data mainly, as the U.S data drives
the markets mostly. Sometimes we look at Key China data as well as European Union data.
Tuesday
CB Consumer Confidence
10.00
JOLTS Job Openings
10.00
Wednesday
ADP Non Farm Employment
08.15
Chicagno PMI
09.45
Crude Oil Inventories
10.30
Fed Interest Rate Decision
14.00
FOMC Statement
14.00
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