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Inflation numbers dominate the data this week with Europe and the USA declaring their current rates and importantly the FED’s favoured inflation measure is due at the end of the week.
European inflation is expected to fall as energy prices have fallen recently but wage inflation remains an issue in Germany so a moderate rise is expected there but overall for Eurozone it is expected to see a drop.
Not so the USA PCE which is predicted a rise but the relative increase is important above 4.4% ( which is top end of expectations) then the market will fret that another rise is imminent as opposed to the widely held view of the FED remaining on a “bullish hold”.
The UK already raised rates again by 0.5% and the weekend press is full of negative stories about mortgage rates and stifled house building and house sales so the mortgage approvals data due on Thursday will be scrutinised for signs that the retail sector is suffering as rates rise. UK inflation remains stubborn but the Bank of England did act decisively despite pressure from politics and cost of living.
We do have both Lagarde and Powell speaking this week at different events and both remain hawkish and as that’s the market expectation; deviation from that stance would likely elicit the biggest reaction.
Commodities are dithering but finding little investment and thus struggle to rally. With investors standing back the market is focused on China and its recovery; which seems heavy and may well need more government intervention.
Palladium particularly is finding few friends and even less investment leaving the metal slumbering at 4 year lows as the auto industry demand diminishes in favour of electric motivation.
Durable Goods Orders MoM
Initial Jobless Claims
Core PCE Index Mom
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