13.12.2022 – Gradually, the stock market is turning towards Christmas. And hardly anyone can still recognize market-moving news. The prices are bobbing along – but fortunately, leveraged traders can earn good money even on the smallest moves. But wait: The CPI is coming up. And then there are the central banks.
Currently not much happening on the trading floor. Jim Reid of Deutsche Bank summed it up like this: If he were to return to the Christmas spirit of years past, the week would go like this: “this week would be about a client Xmas lunch Monday, client Xmas lunch Tuesday, team Xmas drinks Wednesday, firmwide office party on Thursday and mince pies on the trading floor on Friday.” Mince pies are small Christmas cakes in the United Kingdom.
View of the CPI
But far from calm, consumer prices in the U.S. are due exactly today and several key interest rate decisions around the world starting tomorrow. A flattening of U.S. inflation could fuel hopes for an end to tightening by the Federal Reserve. For the Consumer Price Index, the consensus of most analysts is now 7.3 percent. JPMorgan’s trading desk even sees a 10 percent jump in the big SPX if inflation cools particularly sharply. We look forward to seeing how the S&P 500 moves, pictured on the daily chart.
Quelle: Bernstein Bank GmbH
The Fed meets again on Wednesday. And on Thursday follow The European Central Bank and the Bank of England. Most traders now assume, both in the U.S. and in Europe, interest rates will be raised only 50 basis points. Meanwhile, the first even expect for February only a rate step of 25 basis points.
As always, the tone of the central banks will be important. If they confirm hopes of a “pivot” – i.e. a turnaround in interest rate policy, or rather: a gradual exit from the hike, then the stock market could celebrate.
Waiting for the Fed’s reaction
Then there’s U.S. Treasury Secretary Janet Yellen. She just said in an interview with 60 Minutes that there is definitely a risk of recession, but that the banking sector is robust. She also said that inflation would fall sharply in the coming year, as can already be seen in the cost of gasoline and transportation, according to CBS. Presumably she already knows more. We are curious how the data will turn out – Bernstein Bank wishes successful trades and investments!
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