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- UK Inflation is higher than expected 🚨 as US rate uncertainty grinds markets to a halt ✋
UK Inflation is higher than expected 🚨 as US rate uncertainty grinds markets to a halt ✋
🐮🐻 #8: UK CPI and RPI, S&P 500, Alibaba, Dice Therapeutics, EU Natural Gas
TL;DR: UK inflation (CPI) remains stubborn at 8.7% YoY, same as last month and above market expectations of 8.5%. Equity markets had a muted trading day yesterday while futures pricing is expecting the market to open flat today.
📰 What’s moving markets?
UK Inflation data released this morning was higher than expected - CPI was 8.7% YoY, the same print as last month and higher than market expectations of 8.5%. Core CPI (which strips out volatility from food and energy prices) came in at 7.1% YoY, above market expectations of 6.7%.
The S&P 500 lost 0.5% on Tuesday as the market is faced with uncertainty over whether rates will rise to the peak 5.5%-5.75% as projected by Fed Chairman Powell. The market is pricing a 78% chance of a hike to 5.25%-5.5% next month.
Alibaba fell 4% yesterday as the CEO steps down amid ongoing restructuring plans. The company announced in March that it plans to spin off it’s cloud business and pursue separate listings for its logistics and grocery businesses over the next 18 months.
The US Biopharma company Dice Therapeutics soared 37% after Eli Lilly said it would acquire the company for $48 per share. The stock closed at $46.44 yesterday.
EU Natural Gas prices have started to reverse course, falling 5% yesterday as weather forecasts predict cooling temperatures in the region (and therefore less energy demand for air-conditioning).
📊 Chart of the day
Inflation in German Producer Prices has come down to pre-pandemic levels. Some market participants are suggesting that this is a leading indicator for the end of high inflation; however, inflation in the services industry and other sectors more broadly (such as energy) remains elevated.
What is Producer Prices? 🤔
The Producer Price Index (PPI) measures the average change over time in the prices domestic producers receive for their output. It is a measure of inflation at the wholesale level that is compiled from thousands of indexes measuring producer prices by industry and product category. The PPI is different from the consumer price index (CPI), which measures the changes in the price of goods and services paid by consumers.
📅 Coming up this week
Monday 19th June
US NAHB Housing Market Index expected: 51, last: 50, actual: 55
Tuesday 20th June
Japan Industrial Production expected: -0.4%, last: 1.1%, actual: 0.7%
Euro Zone Current Account expected: 30.1B, last: 31.2B, actual: 4.0B
Wednesday 21st June
UK Core CPI (YoY) expected: 6.7%, last: 6.8%, actual 7.1%
UK Headline CPI (YoY) expected: 8.5%, last: 8.7%, actual 8.7%
UK Headline RPI (YoY) expected: 10.2%, last: 11.4%, actual: 11.3%
Canada Retail Sales expected: 0.2%, last: -1.4%
Brazil Interest Rate Decision expected: 13.75%, last: 13.75%
Thursday 22nd June
UK BoE Interest Rate Decision expected: 4.75%, last: 4.50%
US Continuing Jobless Claims expected: 1,766k, last: 1,775k
US Jobless Claims 4-Week Avg. expected: 242.01K, last: 246.75K
UK BoE Interest Rate Decision expected: 4.75%, last: 4.50%
Japan Core CPI (YoY) expected: 3.1%, last: 3.4%
Japan Headline CPI (YoY) expected: 4.1%, last: 3.5%
Friday 23rd June
Singapore CPI expected: 5.5%, last: 5.7%
Spain GDP (YoY) expected: 3.8%, last: 2.6%
📈 The markets at a glance
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