November 10, 2022

“Oil prices steadied this morning after falling for three consecutive days as the impact of renewed Covid curbs in China, the world’s biggest crude importer, weighed. Meanwhile, traders await US inflation data release later today that may give direction on further rate hikes.”

Tim Hallinan – Trading Director

Main Headlines

US consumer prices are set to have jumped once again in October as inflationary pressures seep into an ever-broader range of sectors, bolstering the Federal Reserve’s plan to press ahead with its tightening campaign. The CPI is expected to have risen by another 0.6 per cent last month, up from 0.4 per cent in the previous period. Despite the monthly acceleration, the annual pace is forecast to have slowed to 7.9 per cent, down from 8.2 per cent. Once items such as food and energy are stripped out, “core” CPI is set to have risen 0.5 per cent.

UK housing market demand in October fell at the fastest pace since the start of the Covid-19 pandemic and registered one of the largest drops in more than 20 years as mortgage rates surged, according to a closely watched survey. The Royal Institution of Chartered Surveyors’ new buyer inquiries index on Thursday fell for a sixth successive month in the sales market from minus 36 per cent in September to minus 55 per cent in October. That is the lowest reading since the 2008 financial crisis, excluding spring 2020 when the housing market was largely shut because of pandemic-related measures.

GBP

Sterling is well bid against most major currencies overnight. The UK is set to be the only country in the developed world with employment still below its pre-pandemic level at the start of 2023. A rise in the number of people taking early retirement, worsening health problems and lower international migration have all contributed to a persistent post-pandemic increase in the number of working-age adults who are neither in a job nor looking for one. The UK and Switzerland will sign an agreement on Thursday to strengthen bilateral cooperation in research and innovation.

EUR

Euro is weaker than most major currencies in the early morning trade. EU officials have been told not to hold meetings with UK counterparts unless they are strictly related to the war in Ukraine or are ‘legally mandatory.’ Turkish President Tayyip Erdogan said Russia’s decision to withdraw troops from near the southern Ukrainian city of Kherson is a positive step. The US and Ukraine announced that they will launch negotiations to upgrade a bilateral 2008 trade and investment accord to support Ukraine’s efforts to establish a more transparent and predictable business environment.

USD

The dollar is stronger against euro and weaker against sterling this morning. President Joe Biden starts a week-long trip to Egypt and Asia on Thursday to grapple with some of the United States’ thorniest foreign policy issues. Biden said he wants to run for a second term in the White House and will make a final decision early next year, after his political prospects were boosted by a stronger than expected performance by Democrats in midterm elections. The US Environmental Protection Agency (EPA) said today that it is considering adopting new regulations to address locomotive air pollution.

Markets

US stock-index futures rose, while European equities opened lower, as investors remained on the edge before a report projected to show inflation in the world’s largest economy moderated for a fourth successive month. December contracts on the S&P 500 and Nasdaq 100 added at least 0.3% each, a day after the underlying indexes tumbled to one-week lows amid a blurry midterms verdict and crypto-industry turmoil. Europe’s equity benchmark dropped for a second day. Treasuries traded mixed, with shorter-term yields rising. The dollar fluctuated between gains and losses, while oil extended its slide to a fourth day.

Main Economic Data/Central Banks/Government (All Times CET)

10:00 a.m.: Italy Sept. Industrial Output
10:00 a.m.: ECB publishes Economic Bulletin
11:00 a.m.: UK sells bonds
12:30 p.m.: ECB de Cos speaks
1:30 p.m.: SNB’s Maechler speaks
2:00 p.m.: ECB’s Schnabel, Kazimir, Vasle speak
2:00 p.m.: BOE’s Ramsden speaks
2:00 p.m.: National Bank of Poland publishes minutes
2:30 p.m.: US Initial Jobless Claims, Oct. CPI
3:00 p.m.: National Bank of Poland’s Glapinski holds press conference
8:00 p.m.: Mexico rate decision

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