MARKET WRAPS
Watch For:
EU foreign trade, industrial production, ECB Governing Council non-monetary policy meeting, Autumn Economic Forecast; CPI data for U.K., France and Italy; U.K. PPI, 'Inventing a better Britain' event with Bank of England MPC Member Jonathan Haskel; Germany WPI; France unemployment data; trading updates from Alstom, Renault, Infineon Technologies, Experian, SSE, Intermediate Capital Group, Fuller Smith & Turner, Tullow Oil
Opening Call:
European stock futures were broadly higher amid risk-on sentiment spurred by the soft U.S. inflation print. Asian stocks were higher; Treasury yields were mixed; the dollar gained slightly; while oil futures and gold advanced.
Equities:
Stock futures were broadly higher early Wednesday after cooler-than-expected U.S. inflation data helped reassure investors that the Federal Reserve is likely done raising rates and put a soft landing for the U.S. economy in view.
Sentiment may also get a lift from China's economic data showing modest signs of improvement in October as consumer spending picked up, but the prolonged property slump worsened.
Following on the heels of a summer surge in Treasury yields and energy prices that sent stocks into a correction, the CPI reading was "the latest item in a flood of good news hitting the market in November," said David Russell, global head of market strategy at TradeStation.
"A soft landing and permanent Fed pause look increasingly likely, which would lay the groundwork for a strong year-end. Santa could be coming to town," he said.
Investors are focusing on the U.K. inflation data due later in the day.
Forex:
The U.S. dollar advanced slightly early Wednesday.
The U.S. dollar is expected to remain strong in 2024, aided by soft global growth and comparatively higher U.S. yields, strategists at HSBC Research said.
Central banks lowering their policy rates and fiscal risks were among the many sources of uncertainty that foreign exchange markets will have to navigate, however, they said.
"A number of scenarios point to a resilient dollar, but only a global soft landing would deliver a clear dollar bear case," they added.
Bonds:
Treasury yields were mixed after October's U.S. consumer price inflation report came in below expectations.
"The CPI data confirm what everyone already knew - inflation is on the decline in a meaningful way. The question now for the Fed is whether they continue to believe that slowing the economy into recession is needed to completely conquer inflation. I certainly hope not," said Jamie Cox, managing partner for Harris Financial Group.
Energy:
Oil futures ticked higher after the softer-than-expected U.S. inflation data, together with a weaker dollar, brought a risk-on tone across commodity markets, ANZ said.
However, concerns about oil-market fundamentals were also in focus.
The IEA has said that the global oil market won't be as tight as expected in 4Q as demand is outpaced by upgrades to supplies, ANZ said.
The IEA has also noted that refining margins slumped on month in October, with most regions seeking a return to the profitability seen in late 2Q.
Metals:
Gold gained early Wednesday as investor sentiment was buoyed after data showed price pressures eased in October in the U.S.
The promising inflation report lifted hopes of lower rates that bode well for the non-interest-bearing metal, which often moves inversely to rates.
The lower-than-expected inflation print dragged down U.S. Treasury yields and the dollar, increasing the appeal of the precious metal, Oanda said.
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Aluminum edged higher in Asia, supported by the mostly stronger-than-expected China economic data.
The U.S. October core CPI data released overnight caused an "emphatic" reaction across asset classes, which is "buy everything", except crypto currencies and USD, Pepperstone said.
Market participants seem to have strong conviction that most developed-market central banks may join their Latin American central bank peers in easing policy in 2024, it added.
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Iron-ore futures climbed amid hopes for stronger demand from China's property sector, analysts said.
These hopes have been facilitated by low inventories at Chinese steel mills and expectations of restocking before February's Lunar New Year holidays, ANZ said.
Iron-ore futures may also have gotten a boost from mostly stronger-than-expected China economic data released earlier in the session.
TODAY'S TOP HEADLINES
Fed's Goolsbee: 'We still have a long way to go' to get to 2% target
The October consumer inflation data show that progress continues on bringing inflation down, but price pressures remain well above the Fed's preferred level, Chicago Federal Reserve President Austan Goolsbee said on Tuesday.
"We still have a long way to go before we reach our 2% PCE inflation target," Goolsbee said in a moderated discussion at the Detroit Economic Club. The personal consumption expenditures price index, or PCE, is the Fed's preferred measure of inflation.
Why a derailed $11 trillion corporate bond market looks ripe for a comeback as U.S. inflation slows
Slowing U.S. inflation has sparked hopes of a big turnaround for hard-hit parts of the $10.6 trillion U.S. corporate bond market.
Bonds issued by America's most valuable companies, from Apple Inc. AAPL to https://urldefense.com/v3/__http://Amazon.com__;!!F0Stn7g!EMcalnGzWGr20fh8ue1AieRfl8c8GcRFqkxXONHgFPdtcf94NZ8bl9xqXyu1B503iyrlHxtvRCb6vV8-obn06DqI6IrsGLzWRMbtr-15PYY$ AMZN to Microsoft Corp. MSFT to Johnson & Johnson, JNJ have been trading at some of their lowest prices in nearly two decades, a casualty of the Federal Reserve's interest rate hikes in the past 18 months.
China's Consumption, Industrial Production Improved in October
China's consumption and industrial production improved in October, while investment cooled, suggesting softening growth momentum despite Beijing's ramped-up policy support.
Retail sales, a key metric for domestic consumption, rose 7.6% from a year earlier when China was still roiled by strict Covid-19 lockdowns that sent the country's consumer spending into contraction.
Japan's Economy Shrinks for First Time in Three Quarters
TOKYO-Japan's economy shrank for the first time in three quarters in the July-September period because of sluggish household and corporate spending, contrasting with the U.S. and China, which showed solid growth during the quarter.
The Japanese economy contracted 0.5% in the three months to September from the previous quarter after 1.1% growth in the April-June quarter. The economy shrank 2.1% on an annualized basis, which reflects what would happen if the third-quarter pace continued for a full year.
House Passes GOP Plan to Avert Government Shutdown
WASHINGTON-House lawmakers approved a Republican plan Tuesday that would continue funding federal agencies until early next year, a critical step in averting a partial government shutdown, with House Speaker Mike Johnson (R., La.) relying heavily on Democratic votes to get his bill across the finish line.
The 336-95 vote exceeded a two-thirds threshold required under a special procedure employed by Johnson to sidestep internal GOP disagreements. The measure still requires approval from the Democratic-controlled Senate, where the leaders of both parties have signaled support but timing was uncertain.
Ukraine Seeks to Reignite Counteroffensive With Daring River Crossings
KHERSON, Ukraine-Ukrainian marines slip across the Dnipro River at night in small groups to reinforce a growing contingent of troops engaged in a daring operation to reinvigorate Kyiv's military efforts in the occupied south.
They have established three toeholds in and around villages on the eastern bank of the river in recent weeks, cutting off a road Russia uses to supply troops in the area, according to soldiers involved in the operation. The Ukrainians are hunkered down in basements and trenches and heavily outnumbered. Their hold is precarious.
The $2 Trillion Interest Bill That's Hitting Governments
The world spent the past decade-plus taking advantage of rock-bottom interest rates to binge on debt. An unprecedented bill is coming due.
Governments are expected to spend a net $2 trillion paying interest on their debt this year as higher interest rates make borrowing more expensive, up more than 10% from 2022, according to an analysis of International Monetary Fund data by research consulting firm Teal Insights and a separate analysis by Fitch Ratings. By 2027, it could top $3 trillion, according to Teal Insights.
Israel Says Targeted Operation Conducted Inside Gaza's Largest Hospital
WASHINGTON-Israeli forces carried out a targeted operation against Hamas "in a specified area" of Gaza's largest hospital, hours after the White House backed Israeli assertions that Palestinian militants are running military operations from the enclave's hospitals.
The Israeli military said that it launched "a precise and targeted operation" in Al-Shifa Hospital in Gaza City. The White House had earlier cautioned Israel not to carry out airstrikes against the hospital.
Hedge-fund billionaire Leon Cooperman takes Manchester United stake
Hedge-fund billionaire Leon Cooperman has taken a stake in iconic English soccer club Manchester United.
Cooperman has opened a new position in Manchester United, purchasing 929,078 shares with a market value of $18,386,454, according to a 13-F filing.
Warren Buffett's Berkshire Hathaway Sheds Investments in GM, J&J and P&G
Warren Buffett's Berkshire Hathaway eliminated its stake in a handful of American blue chips, including General Motors and Johnson & Johnson, while the stock market's rally sputtered in the third quarter.
(MORE TO FOLLOW) Dow Jones Newswires
11-15-23 0014ET
