Major US indices finished Tuesday’s trading with growth amid optimistic retail sales data for October and amid the signing by the president of the infrastructure package. By the close of the stock market, the Dow Jones increased by 0.15%, the S&P 500 added 0.39%, and the NASDAQ jumped by 0.76%. The US retail sales in October increased by 1.7% compared to the previous month. In October, the US industrial production also added 1.6% from the previous month.
Yesterday, President Joe Biden signed a bipartisan infrastructure bill worth $1.2 trillion over the next 10 years. The initiative includes spending to upgrade the transportation system, improve utility infrastructure, and provide universal Internet access.
Treasury Secretary Janet Yellen indicated lawmakers risked defaulting on the US government if they couldn’t raise the statutory debt ceiling by Dec. 15.
Biden said he would make a final decision on the Federal Reserve chairman within about four days. The main candidates for the post are Jerome Powell and Fed Board of Governors member Leil Brainard. Given that Brainard’s stance on US inflation and interest rates this year is the same as Powell’s, current Fed policy is likely to continue regardless of which of the two leads the Fed.
On Tuesday, St. Louis Fed President James Bullard endorsed a more aggressive approach to monetary policy, saying he believes the central bank should move in a “more hawkish direction.” With consumer prices rising at their fastest pace in three decades, the central bank may need to recognize that much of the growth reflects an overheating economy. Such a turnaround could push the dollar higher against major currencies such as the euro and yen, as higher rates attract funds from abroad.
Pfizer submits an FDA application for emergency approval of tablets for COVID-19 treatment.
Europe’s stock indices traded flat yesterday. Germany’s DAX and France’s CAC 40 increased by 0.6% and 0.3%, respectively. The British FTSE 100 decreased by 0.3%, Italian FTSE MIB decreased by 0.2%, and Spanish IBEX lost 0.6%. The UK unemployment rate fell more than expected to 4.3% from 4.5% previously, the lowest since July 2020. Meanwhile, the UK consumer price index was 4.2% in annual terms (forecast 3.9%, previous 3.1%), suggesting that inflation is accelerating. Inflation rose 1.1% in the last month (forecast 0.8%).
The UK core CPI (excluding food and energy prices) was 3.4% (forecast 3.1%, previous 2.9%). Two more gas and electricity retailers in the UK went bankrupt, including Neon Energy and Social Energy Supply. Already 20 British energy retailers have gone out of business in recent months. Bank of England Governor Andrew Bailey said next month’s employment data will be crucial for the central bank while considering whether to raise the bank rate for the first time since the pandemic began or not.
ECB spokesman Rehn said yesterday that inflation in the Eurozone would decrease next year, and that the acceleration in inflation is due to the energy and supply crises. Europe will report on inflation today.
Ukraine will lose about $2 billion (1.5% of the country’s GDP) every year if Nord Stream 2 starts working, the head of Naftogaz said. He also expects the US to impose sanctions against the pipeline operator because Russia is “not playing by the rules.” Germany has temporarily suspended the certification procedure for Nord Stream 2. The certification of Nord Stream 2 operator will continue if the form of its organization complies with German law. Gas futures prices in Europe increased by 10.7% amid the suspension of Nord Stream 2 certification. The suspension may last for 4-6 weeks.
In October, OPEC+ increased its oil production by 240,000 barrels per day, to 27.42 million barrels per day. IEA raised OPEC+ crude production forecast for 2021 and expected an increase of another 480,000 barrels per day.
Most Asian stocks fell on Wednesday as the US dollar held near a one-year high, helped by strong US economic data that underscored the need for tighter monetary policy and higher Treasury yields.
Main market quotes:
- S&P 500 (F) 4,700.90 +18.10 (+0.39%)
- Dow Jones 36,142.22 +54.77 (+0.15%)
- DAX 16,247.86 +99.22 (+0.61%)
- FTSE 100 7,326.97 −24.89 (-0.34%)
- USD Index 95.96 +0.55 (+0.58%)
Important events for today:
- ECB President Christine Lagarde’s Speech at 03:20 (GMT+2);
- UK Consumer Price Index (m/m) at 09:00 (GMT+2);
- Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
- US Building Permits (m/m) at 15:30 (GMT+2);
- Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
- US FOMC Member Williams speaks at 16:10 (GMT+2);
- US Crude Oil Inventories (w/w) at 17:30 (GMT+2);
- US FOMC Member Bowman speaks at 18:00 (GMT+2);
- US FOMC Member Waller speaks at 19:40 (GMT+2);
- US FOMC Member Daly speaks at 19:40 (GMT+2);
- US FOMC Member Evans speaks at 23:05 (GMT+2);
- US FOMC Member Bostic speaks at 23:10 (GMT+2).
