Daily summary - Higher PPI reading did not change market sentiment

7:06 PM December 9, 2022
  • US PPI inflation fell to 7.4%YoY in November from 8.0% in the previous month, missing analysts’ estimates of 7.2%YoY. Core PPI inflation remained above 6%
  • Higher inflation reading raises uncertainty regarding the Fed's decision next week. On the other hand, CPI inflation will be released on Tuesday and is a key report for the  US central bank. 

  • While it looks that a 50 bp rate hike is a done deal, a significant surprise in inflation data could make Fed members consider other options and may also influence Fed's forward guidance. 

  • After the publication of today's inflation data, we could observe strengthening of the dollar and equities retreat. However, these moves did not last long as University of Michigan showed an unexpected drop in short-term inflation expectations to the lowest level in more than a year, which brought some respite for the bulls.

  • Crude oil continues to move south as according to some unconfirmed news TC operator may partially restore Keystone operations from tomorrow. Brent crude fell below $75.00 per barrel, while WTI crude is moving towards $70 per barrel

  • The market is pressured by growing concerns about a potential global recession-driven demand downturn additionally. Russian oil is also facing downward pressure so that the price cap rule does not have to be applied. Despite this, Putin has announced the possibility of lowering production due to the fact that some countries may follow  the price limit principle

  • Goldman Sachs does not expect the Chinese economy to fully reopen next year

  • Early in the session stock indices moved higher following the news that Russian and US diplomats are set to meet in Istanbul

  • The WASDE report showed end-of-season stockpiles to be higher for corn and flat for soybeans and wheat

  • Gold rebounded towards $1,800 an ounce today, although slightly higher yields may limit upside potential.

US2000 pulled back after buyers failed to break above 100 EMA (purple line) and key resistance at 1840 pts. Nearest support to watch lies at 1790 pts. Source: xStation5

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