LONDON, Sept 11 (Askume) – Author: Dhara Ranasinghe Looking forward to the day ahead for U.S. and global markets.
While the US presidential debate has captured attention, upcoming US inflation data has moved to the background – but perhaps only temporarily.
Finally, the August consumer price inflation report released on Wednesday is the last major data release before the much-anticipated Federal Reserve interest rate decision on September 18.
Given that the market still sees a roughly 35% chance of a substantial rate cut of 50 basis points next week (with a 25 basis point rate hike being almost certain), the latest data will influence traders’ interest rate bets and thus the broader market.
Economists polled by Askume forecast overall and core consumer prices rose 0.2% monthly, with the main annual price index expected to fall to 2.6% in August from 2.9% in July.
This would be the lowest annual inflation reading since March 2021 and could strengthen expectations of a modest rate cut next week, supporting the dollar.
For Deutsche Bank economists, it is important to keep a close eye on rental inflation, which rose unexpectedly in July, so the question is whether this is a one-off increase.
Ahead of the CPI release, the market was taking cues from Tuesday’s debate between Democratic candidate Kamala Harris and Republican rival Donald Trump, when pop superstar Taylor Swift said she would vote for Harris.
US Treasury yields are lower, while the US dollar (and bitcoin) and US stock futures are generally weaker, which is seen as a boost for Harris ahead of the November 5 presidential election. Signs that this debate will take place
After the debate, online betting site PredictIt showed that for a $1 wager, Harris’s odds of winning increased from 3 cents to 56 cents, while Trump’s odds of winning dropped from 5 cents to 47 cents.
The 10-year U.S. Treasury yield reached 3.605%, the lowest since June 2023, and the dollar traded at 141.68 yen.
Estimates so far from budget forecasters suggest that Trump’s agenda will result in more new federal debt .
The sale of 10-year notes on Wednesday will gauge investor appetite for U.S. government debt.
Bank stocks may also remain in focus after a day of sharp losses.
The Federal Reserve’s supervisory chief on Tuesday outlined a plan to raise big banks’ capital by 9% after facing strong opposition from Wall Street , but it left bank investors disappointed and some critics of the rule feeling frustrated.
There were also some disappointing comments from the banking industry – JPMorgan Chase & Co (JPM.N) lowered its forecast for interest payment revenue on Tuesday, and later on Monday Goldman Sachs (GS.N) Chief Executive David Solomon hinted at a possible 10% drop in trading revenue.
Meanwhile, in Europe, UniCredit CRDI.MI said on Wednesday it had acquired a 9% stake in Commerzbank and would seek approval to buy more, adding that Chief Executive Andrea Orser (Orsel) is preparing to take over the German bank.
Key developments providing direction for US markets on Wednesday:
* U.S. CPI in August
* U.S. 10-year Treasury note auction
The views expressed are those of the author. They do not reflect the views of Askume News, which is committed to integrity, independence and non-partisanship in accordance with the principles of trust.
