Spreadex Market Update
US inflation falls, but core CPI grows, coming to the aid of the damaged dollar
This left the US markets adrift of their recent record highs as they cowered in the face of a resurgent greenback.
The increase in core CPI has been the most significant figure this Friday; stripped of the volatility of oil the USA’s inflation figures appear to be stable at worst, and improving at best. Such stability could be a platform for the Fed to raise rates; the question is now whether it is stable enough. With a June hike ruled out, September has become the date to focus on: hawks now have a sign that US inflation is on its way back to the targeted 2%; doves, on the other hand, still have the cavalcade of weak US data, especially in the jobs sector, to point to. Investors will be hoping for a sign of which way the Fed is currently leaning when Janet Yellen talks this evening.
With Jean-Claude Juncker warning that Greece can’t simply be ‘thrown out’ of the euro, and (denied) reports that German finance minister Wolfgang Schauble has floated the idea of a parallel currency for the Greeks, the EU summit provided very little for the Eurozone to cheer about, leaving it in its recent shade of reddish flatness once more.
Whilst the FTSE has been painfully flat for much of the week, this flatness did leave the FTSE around and above the 7000 level, something it has capitalised on today as it sustained its semi-robust growth as a long weekend loomed. Given how volatile analysts were expecting the post-election landscape to be, even the FTSE’s meekness should be enjoyed; the fact that it is currently outperforming its peers is a bonus.
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