Massive swings as US inflation stays high and UK ready for U-turn
NAB’s Skye Masters says the most surprising response to the higher-than-expected CXPI read was the sharp recovery in US stocks overnight. Bond markets, meanwhile, have priced up mire hikes for longer
NAB Morning Call · NAB - The Morning Call
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Show Notes
Friday 14th October 2022
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It’s been a stormy night, with violent swings in bond yields and US equities. As NAB’s Skye Masters explains, shares plummeting as the higher than expected CPI read but then staged a massive rebound later I the session, fishing markedly higher towards the close. Bond markets responded more predictably, pricing in a more aggressive path of rate hikes from the Fed – maybe 150bp before Christmas. Meanwhile, massive swings on UK bonds with reports that the Truss government might be ready to stage another u-turn on their unfunded tax cuts, although the Chancellor Kwasi Kwarteng has denied this. Today, US retail numbers will have less influence than the CPI, but a strong read will indicate a more resilient economy which would suggest rates will stay higher for longer.
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