Daily Markets: Will We See a Peak in Consumer Prices?January 12, 2022
Today’s Big Picture
Asian markets closed up across the board today as Hong Kong’s Hang Seng rose 2.79%, South Korea’s KOSPI gained 1.54% and Japan’s Nikkei advanced 1.92%. Additionally, India’s Sensex grew 0.88% while China’s Shanghai Composite and Taiwan’s TAIEX finished the day ahead 0.84% and 0.48%, respectively. By mid-day trading, European equity indices are also up across the board.
Ahead of the December CPI report that will be released at 8:30 AM ET, U.S. equity futures are ticking higher. The headline figure is expected to increase 0.4% MoM and 7.0% YoY, while the core reading that excludes food and energy is slated to rise 0.5% MoM and 5.4% YoY. For those looking for some context, if the headline figure comes in as expected on a YoY basis, it would be the first time since 1982. Should the December figures come in hotter as they have for the past 7 of 9 releases, there will likely be greater pressure on the Fed to ramp its efforts to normalize monetary policy, meaning it might raise rates sooner than expected. Today’s report is followed by tomorrow’s December Producer Price Index release, and we suspect all eyes will be watching for adjustments in the CME FedWatch Tool that shows expected probabilities for monetary policy actions by the Fed as the December inflation data is digested.
Per the World Health Organization, as of yesterday there have been over 308 million confirmed cases of COVID-19, including roughly 5.5…