CPI announced on 13th local time… 13-14 FOMC
Still wary of prolonged austerity
The New York stock market moved higher ahead of the release of the US consumer price index (CPI) and the regular meeting of the Federal Open Market Committee (FOMC).
On the 12th (local time) on the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average closed at 34,005.04, up 528.58 points (1.58%) from the previous trading day.
The Standard & Poor’s (S&P) 500 index closed at 3990.56, up 56.18 points (1.43%) from the previous trading day, and the Nasdaq closed at 11,143.74, up by 139.12 points (1.26%).
Investors are paying close attention to the November CPI results, to be announced on the 13th, and the US Federal Reserve’s (Fed) December FOMC regular meeting scheduled for the 13th and 14th.
Inflation peaked and eased in markets after CPI showed a much slower-than-expected slowdown in October and the Fed is expected to adjust the pace of the tightening. However, there are still concerns that the Fed could be aggressive again (in favor of monetary tightening) at the December FOMC, as the November CPI did not slow down as expected.
According to the Wall Street Journal, economists expect the CPI to rise 0.2% in November, down from 0.4% in October, and to rise 7.3% year over year, down further from the previous month. 7.7% increase from the previous month. Core CPI for November is expected to rise 0.4% month on month and 6.1% year on year. It had increased by 0.4% and 6.3% respectively in the previous month.
The probability that the Fed will raise interest rates by 0.50 percentage point in December, reflected in the US interest rate futures market, is about 74%. A week before the previous FOMC, market expectations were formed for interest rates to rise up to 90%, but this time the market is on alert until just before the meeting.
The monetary policy meeting of the European Central Bank (ECB) and the Bank of England (BOE) is also scheduled for the 15th of this week.
