Mid-Week Market Minute 1.11.23

Markets are Modestly Higher Awaiting CPI Report

Global stocks were modestly higher in early trading this week as investors await Thursday’s crucial inflation reading. In the U.S., technology and communications stocks were notably higher, as the Nasdaq composite index rallied nearly 2%. International stocks are on pace for another strong week of performance, as well, with the MSCI ACWI ex US (international developed index) up about 1.5% along with the MSCI Emerging Markets index which is more than 2.5% higher.

With a quiet economic calendar early in the week, markets are looking toward Thursday’s CPI inflation report. The December CPI is expected to be up 6.6%, down from the 7.1% reading in November. Core prices (ex food & energy) are projected to fall from 6.0% to 5.7% for December. The Federal Reserve will pay close attention to this report, and a better-than-expected reading could help support the case for less aggressive rate hikes going forward. Recently, the Federal Reserve has been noncommittal in signaling their intentions to the markets. On Tuesday, Fed Chairman Jerome Powell, in prepared remarks at Sweden’s Riksbank, noted “it’s a good thing that the Fed is politically independent. The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors.” The Fed’s next rate-setting meeting is set to run Jan. 31 and Feb. 1, with markets currently pricing in about a 75% chance of a 0.25% (25bp) increase at the conclusion of the meeting.

Source: GSAM, CNBC, JPMorgan

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