While consumer prices in the US rose to the highest level in 39 years, supporting the expectations that the Fed may raise interest rates four times, starting in March, the reaction of the markets was mixed.
On Wednesday, when the data was released, Wall Street indices closed with gains. Dow Jones finished the day 0.11%, S&P 500 0.28%, Nasdaq 100 0.38 percent.
However, as of this morning, US futures indexes have dropped. In Asia, the Japanese Nikkei fell close to 1%. The Chinese CSI 300 index is also down, while Hong Kong Hang Seng is holding horizontally in positive territory. Sales in Asia were driven by the approaching bond payments of Chinese real estate companies, including China Evergrande Group, this week.
After the US inflation data, there was no significant movement in bond yields, largely due to the fact that they were priced in. The US 10-year bond yield ended Wednesday at 1.74 percent.
The Bloomberg Dollar Index fell 0.62% on Wednesday to its lowest level since November. WTI crude oil exceeded $83 a barrel yesterday, after the Energy Information Administration in the US announced that crude oil inventories in the country decreased by 4.55 million barrels last week and fell to the lowest level since October 2018. Bitcoin is trading below $44,000.
Producer price index to be announced in the USA
After the consumer price index, producer inflation data for December will be announced in the USA today.
According to the Bloomberg survey, producer prices are expected to increase by 0.4 percent monthly and 9.8 percent annually. At the same time, data on weekly jobless claims in the US will also be released.
At 18:00 CET, the US Senate Banking Committee will hold a session for Fed Governor Lael Brainard’s nomination for Fed Vice Chairman.
According to the previously released transcript, Brainard said, “Our monetary policy is focused on maintaining an all-encompassing economic recovery while bringing inflation back to 2 percent. This is our most important task,” he said. Speaking to the Wall Street Journal, St. Louis Fed President James Bullard said it seemed appropriate to raise rates four times this year due to rising inflation. Bullard previously predicted three rate hikes in 2022. Bullard, who has the right to vote in the Fed’s interest rate decisions this year, emphasized that it is important to start raising interest rates early.