General Market Analysis – 11/10/24

Mixed US Markets after Strong CPI – S&P Down 0.2%

US markets experienced a mixed trading session as CPI data came in higher than expected, while weekly unemployment claims rose. FOMC officials, however, downplayed the CPI numbers, suggesting that inflation is generally moving lower, in line with their expectations. Stock indices edged lower, with the Dow dropping 0.14%, the S&P falling 0.21%, and the Nasdaq slipping by just 0.05%. Treasury yields also had a mixed day, with the 2-year note losing 4.9 basis points to 3.986%, while the benchmark 10-year added 0.4 basis points to 4.071%. The US dollar traded within familiar ranges, with USD/JPY being the day’s biggest mover. Oil prices remained volatile but regained some lost ground on increased demand expectations, with Brent crude rising 3.68% to $79.40 and WTI up 3.56% to $75.85. Gold also saw gains, ending the day 0.6% higher at $2,623.58.

Strong CPI Data Fails to Lift the Dollar

Despite stronger-than-expected CPI data in the US, the dollar did not see the boost many investors had anticipated. This data was released alongside weekly unemployment claims, which pointed to a weaker labour market. However, it was likely the reaction of Federal Reserve members, who dismissed the CPI increase as a temporary blip in an otherwise downward trend, that diminished the data’s impact. Many traders expected the dollar to rally, but it instead saw losses by the end of the session, particularly against the yen. With more inflation data due from the US today, in the form of the PPI numbers, another upside surprise may not be as easily discounted and could trigger a fresh push higher for the greenback.

Further US Inflation Data on the Horizon

Investors are bracing for more market volatility today as they digest the mixed data from the US and await further updates. The Asian session remained relatively quiet with no significant risk events on the calendar. However, later in the day, attention will shift to key economic data. The London session will focus on the UK economy, with the release of the latest GDP figures, where a 0.2% month-on-month increase is expected. Early in the New York session, the PPI numbers will be released. Although PPI typically has less impact than CPI, given the higher-than-expected CPI data last night, another positive surprise could lead to further market movements. The week will conclude with the University of Michigan’s Preliminary Consumer Sentiment and Inflation Expectations report.

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