Spreadex Market Update
US inflation misses estimates but markets still suggest September lift-off
The miss in both CPI and core CPI failed to dissuade the markets that a September lift-off is still on the horizon; the Dow Jones quickly widened its losses after the bell, whilst the dollar continued to look perky, if a bit softer than before the inflation figures were announced.
The rate hike picture might become a bit clearer this evening, when the most recent FOMC meeting minutes are released; then again, it might not. The last FOMC meeting was at the end of July, before the yuan devaluation (and continued Chinese volatility), an event that may cause the doves in the Fed to chirp a bit lower come the September meeting. Gold certainly seems to think a lift-off might be pushed until December, surging to a near month high following the US inflation reveal.
Over in the Eurozone and any mild bounce the DAX and CAC might have received after the Bundestag backed the third bailout soon disappeared, with both seeing losses of over 1% as the day went on. The bailout had an incredibly painfully conception (if not, oddly enough, birth), and it seems that, as well as the weight of fresh market woes like China suppressing investors’ appetite for risk, any cheer that could have greeted the successful signing of a deal has been replaced with embryonic pockets of political and public anger across the region.
And what of the FTSE? Well the script was almost pre-written for the UK index this Wednesday; gradually widening losses following another China-inspired collapse in its oil and mining stocks, made worse by a weak US open and a lack of UK-specific news. Let’s see if the FTSE can escape this Groundhog Day-situation tomorrow.
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