“Soft Landing” Expectations Increased After US Inflation…

Before the FED meeting decisions to be announced tomorrow, we followed the November inflation data from the USA at 16.30 (GMT+3) today. The data came as follows.

• USA – Consumer Price Index (November) (monthly): 0.1% (Exp: 0.3% ; Previous: 0.4%)
• USA – Consumer Price Index (November) (annual): 7.1% (Expected: 7.3% ; Previous: 7.7%) 
• USA – Core Consumer Price Index (November) (monthly): 0.2% (Exp: 0.3% ; Previous: 0.3%)
• USA – Core Consumer Price Index (November) (yoy): 6.0% (Exp.: 6.1% ; Previous: 6.3%)

When we look at the data, there is a decrease in both headline and core inflation compared to the next month. In addition to the headline inflation, the decline in core inflation led to a dovish mood in the markets. While the Dollar Index declined to the level of 103.60, the EURUSD parity rose to 1.0670. The ounce Gold side jumped to $ 1820, while the USDJPY pair was the hardest hit from the data, falling to 134.65. The US 10-year bond yield also fell below 3.5%. There was also a slight reaction in US futures indices.

When we look at the data, we see that there is a limited decrease on the energy side, but inflation continues on the food side. For this reason, although this month’s inflation was met by the market as a pigeon, there are still question marks about inflation in the coming months.

After the data, the possibility of the FED to increase interest rates by 50 basis points strengthened tomorrow, while the expectation for an interest rate hike was 25 basis points each in the February and March 2023 meetings, and the interest ceiling decreased to 4.86%.

Tomorrow, with the latest inflation data, we will see the thoughts of the Fed’s Powell and the FOMC members on the dot plot chart.

• The UK’s Unemployment Rate rose from 3.6% to 3.7% in October, according to the latest data released by the UK’s Office for National Statistics on Tuesday. The number of people claiming unemployment benefits increased by 30.5 thousand in November, compared to the previously recorded -6.4 thousand and -13.3 thousand expectations. The Average Income Index, including bonuses, increased from 6.0% to 6.1% in October. Market expectations were for an increase to 6.2%.
• Consumer inflation in Germany eased from 10.4% to 10.0% on an annual basis in November, in line with the expectations. Inflation decreased by 0.5% on a monthly basis.
• Turkey’s industrial production increased by 2.5% in October, contrary to the 0.1% increase expectation. Retail sales, on the other hand, increased by 1.4%.
• Germany’s October ZEW Economic Sentiment Index rose sharply to -23.3 in December from -36.7 in November. In addition, the Current Situation Index rose from -64.5 to -61.4 but fell short of the market expectation of -57. In the same period, the ZEW Economic Sentiment Index for the euro area rose from -38.7 to -23.6.
• The ZEW Institute, interpreting the data, said, “The vast majority of financial market experts expect the inflation rate to decline in the coming months.” Also, “Combined with the temporary stability in the energy markets, this leads to a significant improvement in the economic outlook.” The comment has been made.