A Mix Of Economic Data Caused Confusion In The Markets
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The equity marathon that kept going on for questionable reasons since Tuesday ended in tears yesterday, with the arrival of a new set of economic data that crushed the optimistic rhetoric of soft landing.
The latest data
Released yesterday, the latest data showed that US producer price inflation rose more than expected on a monthly basis, both for headline and core data, and the core PPI eased less than expected – similar to what we saw in the CPI data, BUT the Philli Fed manufacturing index was a disaster with an unexpected drop from -8.9 to -24.3 – the expectation was a -7.4 print.
Fed
So that crushed the idea that the economy is strong, without however fueling the Federal Reserve (Fed) cut expectations, as the slowdown in inflation needs to be addressed for some more time.
And of course, comments from two Fed members were the last nails in the coffin yesterday. Loretta Mester said that she would go for a 50bp hike if she had the right to vote in the latest FOMC meeting. And James Bullard said that he would back a 50bp hike in March, if he could vote this year.
The US 2-year yield consolidates a touch below 4.70%, while the 10-year yield hit 3.90% for the first time this year.
US Stocks
The S&P500 gave back nearly 1.40% yesterday, while the more rate-sensitive Nasdaq fell nearly 2%.
European stock
US futures hint at further selloff before the weekly closing bell, as in the absence of important data, investors will have to digest the week’s mixed data. And the bad news is, the European stock traders will also have to think whether a further rally in European stocks makes sense, when the EURUSD is trending lower.
Watch the full episode to find out more!
- 0:00 Intro
- 0:44 Equity investors are victim of mixed economic data
- 2:33 Rate expectations and yields update
- 4:35 Equity update
- 5:16 FX update
- 6:23 Gold down, Bitcoin up
- 8:40 There is no such thing as ‘no landing’
Ipek Ozkardeskaya
Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
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