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- 🐮🐻 #2: Equities rally (and so does volatility) ahead of US CPI data today
🐮🐻 #2: Equities rally (and so does volatility) ahead of US CPI data today
Plus: FOMC meeting expectations, UK recession likelihood and the BoE
Bull & Bear
June 13, 2023
One-liner: Equities remain strong ahead of US CPI data being released at 13:30 BST today. Market participants are expecting CPI to print at +5.3% yoy, which is the same increase as last month.
📰 What’s moving markets?
The S&P 500 and Nasdaq 100 rallied to their highest closing levels since April 2022, up 0.93% and 1.76% respectively on the day.
Despite positive market sentiment, volatility (VIX) rose 8.5% yesterday, reflecting uncertainty over the upcoming US CPI data being released at 13:30 BST today.
Markets are now pricing a 72% probability that the Fed will hold rates at tomorrows FOMC meeting, an expected pause in rate hikes which is likely contributing to the optimism around equity markets.
The UK is expected to avoid a technical recession this year with KPMG forecasting 0.3% growth due to falling energy prices and alleviating supply chain disruption. However, the BoE may need to raise interest rates more than once to control inflation, with expectations of a 25bps raise next week to 4.75% and market pricing implying interest rates could be as high as 5.5% by the end of the year.
📊 Chart of the day
The Logistics Managers Survey (LMI) has declined to an all-time-low in the US, indicating a significant decrease in activity in the logistics sector (including freight) which may be indicative of a slowing economy
Logistics Mangers Survey Index as at May 2023
🤔 What is LMI?
“The Logistics Managers Survey is a monthly study aimed a revealing the status of US logistics activity. The LMI score is a combination of eight unique components that make up the logistics industry, including: inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The LMI is calculated using a diffusion index, in which any reading above 50 percent indicates that logistics is expanding; a reading below 50 percent is indicative of a shrinking logistics industry.”
📅 Coming up this week
Monday 12th June
India CPI expected: 4.42%, last: 4.70%, actual: 4.25%
Tuesday 13th June
UK Average Earnings ex Bonus expected: 6.9%, last: 6.7%
German CPI expected: 6.1%, last: 6.1%
US CPI (core) expected: 5.3%, last: 5.5%
Wednesday 14th June
UK GDP expected: 0.3%, last: -0.3%
US PPI (core) expected: 2.9%, last: 3.2%
US Fed Interest Rate Decision expected: 5.25%, last: 5.25%
Australia Unemployment Rate expected: 3.7%, last: 3.7%
China Retail Sales expected: 13.9%, last: 18.4%
Thursday 15th June
Russia GDP (quarterly) expected: -1.9%, last: -2.7%
Friday 16th June
Euro Zone CPI (core) expected: 5.3%, last: 5.3%
Euro Zone wages expected: 3.3%, last: 5.1%
Japan BoJ Interest Rate Decision expected: -0.1%, last: -0.1%
📈 The markets at a glance
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