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14 Nov 2023

US CPI jolts markets

• US CPI. Lower than expected US inflation generated a sharp downward repricing in US rates. The plunge in bond yields weighed on the USD & boosted sentiment.• AUD jolt. The backdrop has seen the AUD rebound with the over 2% rise over the past 24hrs unwinding the bulk of last week’s fall.• Data flow. Q3 wages released today, as is the China data batch. US retail sales are due tonight with the Australian jobs report out tomorrow. All eyes were on the latest reading on US CPI inflation, and the lower than projected figures jolted markets back to life...

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Rate expectations

This morning’s move in bonds might not rival the transition from Brosnan to Craig, but it has reordered the global currency landscape. Yields are lower across the curve, and the dollar is down against all of its rivals after a softer-than-anticipated October inflation print. The Federal Reserve is now expected to ease policy more quickly and dramatically than many of its major counterparts over the next year – with the European Central Bank standing as the lone exception.  But long-term yield differentials are still tilted overwhelmingly in the dollar’s favour. The difference between ten-year Treasury yields and our gross domestic...

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Core US inflation slows, reinforcing “peak rates” view

Underlying US consumer inflation softened more than expected last month, essentially eliminating market-implied odds on one more move in the Federal Reserve’s tightening cycle, and sending global yields lower. According to data published by the Bureau of Labor Statistics this morning, the core consumer price index – with highly-volatile food and energy prices excluded – rose 4.0 percent in October from the same period last year, up 0.2 percent on a month-over-month basis. This was weaker than consensus estimates among economists polled by the major data providers ahead of the release – which were set at 4.1 and 0.3 percent,...

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Markets flatline ahead of inflation print

Traders are keeping their powder dry ahead of this morning’s US consumer price index report, which is expected to show underlying inflation pressures remaining relatively stubborn, keeping the Federal Reserve on a hawkish footing. Equity futures, Treasury yields, and the dollar are moving sideways. The Canadian dollar remains weak amid an absence of domestic catalysts – and against a more cautious risk backdrop. The British pound is almost unchanged against the dollar and euro after data showed wage growth slowing slightly in the third quarter, but remaining well above the Bank of England’s comfort zone. Earnings excluding bonuses were 7.7...

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