US Stocks Push Higher Ahead of Inflation Data – Dow up 0.4%
US stock indices again pushed higher in trading yesterday, with both the S&P and Nasdaq registering record closes. The Dow jumped 0.43% to 45,711, the S&P added 0.27% to 6,512, and the Nasdaq gained 0.37% to 21,879. Treasury yields and the dollar both regained some of their recent losses ahead of inflation data due out later today. The DXY gained 0.31% to 97.77, while the 2-year yield added 7 basis points to move back to 3.556% and the 10-year yield added 4.4 basis points to move back to 4.084%. Oil prices pushed higher after Israel attacked Hamas leaders in Qatar, with Brent up 0.68% to $66.47 and WTI up 0.69% to $62.70 a barrel. Gold pulled back after recording another new high, finishing the day down 0.25% at $3,625.81 an ounce.
Inflation Data Key This Week
All eyes will be on US inflation data this week, after expectations for more Fed rate cuts were priced into the market following last week’s employment numbers. FX traders will be paying particular attention to the numbers, with the dollar on the back foot against most of the majors. On-target or lower-than-expected prints from either tonight’s PPI, Thursday’s CPI numbers, or both, would see the market strongly pricing in more rate cuts into the new year. At the moment, the market is looking at a 61% chance of seeing three rate cuts by year-end, and this week’s numbers could go a long way toward deciding whether we have two or three cuts in the pipeline. This could have significant implications for the dollar in the coming months.
Economic Event Calendar Livens Up for Traders Today
The macroeconomic calendar kicks into action today with some key inflation data due out across the sessions. Geopolitical updates will again provide stimulus for markets, in addition to fundamental updates, with a strong focus on the Middle East after yesterday’s missile attack by Israel on Hamas leaders in Qatar. The Asian session will see Chinese markets in focus with both CPI (exp. -0.2% y/y) and PPI (exp. -2.9% y/y) numbers due out. There is no tier-1 data due out in the London session today; however, we do hear again from Swiss National Bank Chair Martin Schlegel, which could see moves in the franc. The major data update of the day comes in the New York session with the first of two key inflation updates for the week. The US PPI data is due out, with both the month-on-month PPI and Core PPI numbers expected to print at +0.3%. The weekly US Crude Oil Inventory data is due out later in the session, but expect the PPI numbers to dominate sentiment, especially if they miss expectations.
