Marketmind: US inflation looms large with Asia on holiday
By Wayne Cole
(Reuters) — A look at the day ahead in European and global markets from Wayne Cole.
It's been unsurprisingly quiet in Asia on Monday with China, Japan, Singapore and several other centres on holiday.
It's also a public holiday for Lunar New Year in New York State for the first time, although that doesn't seem to encompass Wall Street. U.S. stock futures are barely changed, European equity and Treasury futures a fraction firmer and the dollar a shade softer.
Markets would likely have been cautious anyway given the U.S. consumer price report for January is out on Tuesday and will refine wagers on whether the Federal Reserve cuts in March or May.
Headline CPI is forecast to rise 0.2% month-on-month, with core up 0.3%. The annual CPI would return to 3.0%, where it was in the middle of last year, while core is seen slowing to 3.8%, the lowest since mid-2021. Prices for used cars are set to be a big drag, while everyone is waiting for rent growth to finally start slowing.
The range of estimates for the core is +0.1% to +0.3%, which suggests the risks lean to the downside. Note the seasonal adjustment revisions out last Friday will make little difference, given the six-month annualised pace changed just marginally to 3.25% from 3.21%.
Futures have given up on a March rate cut, which has come in to just a 17% chance, while a May easing stands around 80%. The market implies 121 basis points of cuts for the year, down from 145 basis points a couple of weeks ago.
There are at least eight Fed speakers on the calendar this week, including the always influential Governor Christopher Waller.
Also out this week is U.S. retail sales data, which is forecast to fall 0.1% overall but to rise 0.3% excluding autos. The control
Read more on investing.com
