Financial Markets Daily Report14 December 2022
In yesterday’s session, the lower-than-expected release of US CPI inflation pushed down the expectations of a far too tightened monetary policy in the Federal Reserve. Headline inflation moderated from 7.7% to 7.1%, confirming the downward trend but still at very elevated levels, while core inflation edged down 0.3pp to 6.0%.
- In yesterday’s session, the lower-than-expected release of US CPI inflation pushed down the expectations of a far too tightened monetary policy in the Federal Reserve. Headline inflation moderated from 7.7% to 7.1%, confirming the downward trend but still at very elevated levels, while core inflation edged down 0.3pp to 6.0%.
- In this context, sovereign yields declined across the board, with the 2 and 10-year US Treasury yields declining by 16 and 11bp, respectively. In stock markets, volatility measured with the VIX index declined and the expectation of a lower path for official interest rates led to advances across the globe.
- Today the focus will be on the US Federal Reserve meeting, which is expected to raise the target range by 0.50pp up to 4.25%-4.50%. FOMC members will also update the macroeconomic projections, which might reflect a higher terminal rate than shown in the September forecasts (4.50%-4.75%).