Headlines:
- Bitcoin consolidates in a tight range ahead of the US CPI. What to watch next?
- Nasdaq analysis today as price is dancing around yesterday’s close (but probably not for long)
- Crude oil extends gains as Houthi attacks on Saudi Arabia escalate, raising supply disruption risks
- China’s September lending surprise masks a much deeper slump in credit demand
- Ethereum remains under pressure amid intensifying geopolitical and macro risks. What’s next?
- Today’s oil price analysis shows early signs that bulls are losing steam
- Connecting the dots: Why strong US bank earnings don’t always mean a healthy economy
- Gold gets hit again by a jump in oil prices as the focus turns to US CPI. What to watch?
- European stock market open: Stocks advance as investors brace for US inflation data
- Spain September CPI confirmed at 4.9% as rising core inflation adds to ECB rate hike pressure
- What is the distribution of forecasts for the US CPI?
- What are the main events for today?
- German wholesale prices continue to push higher in September, keeping inflation risks in focus
- Chart of the day: Gold price faces crucial $4,200 breakout test as US CPI looms
- Economic data spotlight: Will the US CPI report change the Fed’s rate hike plans?
- FX option expiries for 14 October 10am New York cut
Markets:
- WTI crude oil up 1.38% to $95.45
- Gold down -0.47% to $4137
- AUD leads, CHF lags
- S&P 500 up 0.13% to 7866
- US 10y Treasury yield down 1 bps to 5.20%
- Bitcoin up +0.26% to $83,317
It’s been a rather uneventful session in terms of economic data or news releases. WTI crude has extended the gains into new weekly highs this morning, leading to a pullback in all the other markets. There was no clear catalyst for the move, although Iran’s revolutionary guards said that a container ship sunk in the south of the Strait of Hormuz after hitting a naval mine.
In the American session, all eyes will be on the US CPI report. The focus will be mainly on the Core CPI M/M measure, as Fed members have been focusing on the monthly pace of core inflation to determine how many rate hikes will be needed and how quickly they should tighten policy.
The probabilities for a rate hike in October currently sit around 21% because traders have been waiting for the CPI data to completely rule out a hike at the upcoming meeting despite the pushback from Fed members. I feel like an uptick to 0.3% might not be enough for the market to fully expect a hike in October, but a jump to 0.4% should definitely do it. In such a case, I would expect the market to go into risk-off with the stock market falling, the US dollar rallying and precious metals sinking.
An in-line or even lower than expected figure, on the other hand, will likely provide a short-term relief, giving the stock market and precious metals a boost while weighing on the US dollar. The data won’t change the bigger picture, though, as the inflationary pressures from the Middle East crisis will persist.
This article was written by Giuseppe Dellamotta at investinglive.com.