Previous Trading Days Events 12 Jan 2024

The PPI data report on Friday showed that S. producer prices unexpectedly fell in December, a different picture than the CPI report, suggesting inflation would continue to subside boosting expectations of rate cuts to happen at the expected period.

The inflation pipeline is clearing and consumer prices will gradually get to the Feds 2 target, said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.

The PPI has now declined for three consecutive months.

Financial markets remain hopeful that the Fed will start cutting interest rates in March, though most economists are leaning towards May or June, given the labour markets resilience.

Based on the CPI and PPI data, economists estimated the PCE price index excluding food and energy rose 0.2 in December after gaining 0.1 in November and October.

The key upside risk to inflation is from the war in the Middle East and potential disruptions to trade flows and global energy supplies, said Bill Adams, chief economist at Comerica Bank in Dallas. But petroleum and renewables output is growing faster than GDP in the U.S., which so far has offset the impact of geopolitical risk and kept energy prices well behaved.

Source httpswww.reuters.commarketsususproducerpricesunexpectedlyfalldecember20240112

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