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Fed's "favourite gauge of inflation" - Core PCE - reached 4.7%

Fed's "favourite gauge of inflation" - Core PCE - reached 4.7%| FXMAG.COM
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It has been quite a quiet start to the week with many major markets still closed for Xmas holiday, but no one saw Santa coming this year, have you? 

fed s favourite gauge of inflation core pce reached 4 7 grafika numer 1fed s favourite gauge of inflation core pce reached 4 7 grafika numer 1

On the contrary, the Bank of Japan led drama across the global financial markets reminded that the year will certainly not end on a positive footage, even though the last trading week of the year is expected to be marked by a 'Santa rally'. 

A few encouraging news, however, could give a minor boost to equity markets. 

Read next: Residents Of Brazil Will Not Be Able To Use Cryptocurrencies As Legal Tender| FXMAG.COM

First, released last Friday, the US PCE data, the Federal Reserve's (Fed) favourite gauge of inflation fell to 5.5% in November, the core PCE slipped below 5% to 4.7%. Still more than twice the 2% policy target, but on the right path after all the tightening drama of 2022.  

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The latter gave a very small boost to US equities before Xmas, but it really didn't help the S&P500 to reverse weekly losses. The index closed the week 0.20% lower than where it started. It is now below the major 38.2% Fibonacci retracement, meaning that we are now in the bearish consolidation zone and could expect a further and possibly a sustainable selloff below 3796, which is the 50% retracement level. 

Second, the Chinese reopening continues, with news that the country will scrap Covid quarantines and lower Covid to a lower-threat disease. The news help the Chinese stocks gain at the start of the week. Yet, there is reportedly around 250 million new cases since the reopening, which will likely throw a shadow on the reopening glow. 

But crude oil is up by around 15% since the December dip, and the Chinese reopening news could give a helping hand to oil bulls for an extension of the rally to the $88pb level.


Ipek Ozkardeskaya

Ipek Ozkardeskaya

Ipek Ozkardeskaya provides market analysis on FX, leading market indices, individual stocks, oil, commodities, bonds and interest rates.
She has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist in Swissquote Bank. She worked as Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
She is passionate about the interaction between the economy and financial markets. She has been observing and analyzing a wide variety of relationships between the economic fundamentals and market behaviour over the past decade. She has been privileged to live and to work in the world's most exciting financial hubs including Geneva, London and Shanghai.
She has a Bachelor's Degree in Economics and a Master's Degree in Financial Engineering and Risk Management from the University of Lausanne (HEC Lausanne), Switzerland.


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