# Wall St seen steady ahead of inflation data, Fed later in week
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-12
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Stocks, Oil, Dollar Languish as Central Banks
Meta Description: Global stocks, oil, and the dollar face volatility as central banks prepare for potential rate hikes, with market consensus unsure of future inflation trends.
URL: https://financedigest.com/wall-st-seen-steady-ahead-of-inflation-data-fed-later-in-weekhtml

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By Huw Jones

LONDON (Reuters) – Global stocks, oil and the dollar languished on Monday as investors braced for the last round of transatlantic interest rate hikes this year from a trio of central banks, hoping that a hitherto hefty pace of increases in borrowing costs will finally show signs of easing.

S&P 500 futures and Nasdaq futures recovered earlier losses to edge higher, indicating a steady start on Wall Street and helping European indices trim their modest losses.

[Oil prices gave up early gains](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain") to deepen a multi-week decline, as a weakening global economy offset tighter supplies from the closure of a key pipeline supplying the United States, and Russian threats of a production cut.

The dollar eased, its losses contained by [data last week](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week") that showed U.S. wholesale [inflation rose more than expected](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") last month, reinforcing the view that the Federal Reserve may have to keep interest rates higher for longer.

The U.S. consumer price index for November is due on Tuesday, when a slowdown in [core annual inflation](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult") is anticipated.

A heavy event risk calendar this week [stands to define the core themes for 2023,” ING bank](https://www.financedigest.com/kpmg-stands-by-audits-of-silicon-valley-bank-and-signature-bank-ft.html "KPMG stands by audits of Silicon Valley Bank and Signature Bank – FT") said.

[Market consensus was still “underappreciating” the risk of inflation](https://www.financedigest.com/hungarys-booming-wedding-market-doused-by-soaring-inflation.html "Hungary’s booming wedding market doused by soaring inflation") staying higher longer, and “dangerously second-guessing” the Fed in terms of rate cuts in the second half of next year, ING said.

The MSCI all country stock index was down 0.2%, the benchmark having lost about 18% so far this year, wiping out all gains chalked up in 2021.

In Europe, the STOXX index of 600 companies was down 0.6%.

Economists expect the Federal Reserve on Wednesday, and the European Central [Bank and Bank of England](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") on Thursday to all raise rates by 50 basis points, still a slowing down from the 75 basis point hikes seen in recent meetings.

Patrick Spencer, vice chair of [equities at Baird investment](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities") bank, said central banks will start taking a less aggressive stance this week, though Tuesday’s CPI data will be critical.

It’s the last important [week of the year](https://www.financedigest.com/u-s-weekly-jobless-claims-fall-layoffs-lowest-in-more-than-21-years.html "U.S. weekly jobless claims fall; layoffs lowest in more than 21 years"), after this week you’ve got no real sort of catalysts. If the CPI is a muted number, we’re off to the races and we’ll get our year-end rally,” Spencer said.

But irrespective of the CPI, deflationary pressures are increasing, with [crude oil prices](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") down for the year, and iron ore, lumber and house prices also down, Spencer said.

“All this talk of recession, I think it is certainly in the price, it’s in the markets. The key about recession is generally employment, and I [think employment is going to be stronger than people](https://www.financedigest.com/over-a-third-of-uk-people-think-thomas-whitmore-from-independence-day-will-be-joined-by-donald-trump-in-disneys-hall-of-presidents.html "Over a third of UK people think Thomas Whitmore from Independence Day will be joined by Donald Trump in Disney’s Hall of Presidents") give it credit,” Spencer said.

[ASIAN SHARES](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade") FALL

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.2%, erasing almost all of the previous week’s gains stemming from optimism that [China is finally opening up its economy with the dismantling of its zero-COVID policy](https://www.financedigest.com/dutch-responds-to-us-china-policy-with-a-plan-to-curb-semiconductor-tech-exports.html "Dutch responds to US China policy with a plan to curb semiconductor tech exports").

Japan’s Nikkei eased 0.2%.

Chinese bluechips dropped 1.1%, while [Hong Kong’s](https://www.financedigest.com/screening-of-winnie-the-pooh-horror-film-cancelled-in-hong-kong.html "Screening of ‘Winnie the Pooh’ horror film cancelled in Hong Kong") Hang Seng index was down 2.2%, as investors’ focus shifted away from crippling COVID-19 curbs to the surge in infections that is now disrupting the economy.

While the Fed is widely expected to raise rates by 50 basis points on Wednesday at its last meeting of 2022, the focus will also be on the central bank’s updated economic projections and Fed Chair Jerome Powell’s [press conference](https://www.financedigest.com/5-top-tips-when-holding-a-crisis-press-conference.html "5 Top Tips When Holding a Crisis Press Conference").

We also want to understand if Jay Powell opens the door to a slowdown to a 25bp hiking pace from February – again, while in line with market pricing, this could be taken that we’re closer to the [end of the hiking cycle](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle") and is a modest USD negative,” said Chris Weston, head of research at Pepperstone.

Kevin Cummins, chief U.S. economist at NatWest, said any surprise in the November CPI report was unlikely to shift the [Fed from a 50-basis-point rate hike](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May"), although it would play a bigger role in the policy statement and the tone of Powell’s press conference.

In currency markets, the [dollar eased](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") 0.295% to 104.74, although it was not too far away from the five-month trough of 104.1 hit a week ago.

[Sterling gained](https://www.financedigest.com/sterling-erases-post-boe-gains-as-omicron-weighs.html "Sterling erases post-BoE gains as Omicron weighs") 0.2% to $1.2295.

[Treasury yields](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") held largely steady on Monday. The [yield on benchmark 10-year Treasury notes eased](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") to 3.5342%, from its U.S. close of 3.5670%. The two-year yield touched 4.3273%, down slightly from its U.S. close of 4.330%.

Brent crude futures were off 0.7% at $75.58 a barrel while U.S. West Texas Intermediate crude was at $70.72 a barrel, off 0.4%.

Spot gold was 0.3% lower at $1,792 per ounce.

(Reporting by Huw Jones, Editing by Bradley Perrett, Sam Holmes, David Evans and Susan Fenton)


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