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US inflation data shows the US moving further away from the Fed’s 2% target as Trump prepares to re-enter the Oval Office: US inflation saw a slight increase in October to 2.6%, in line with expectations and 0.2 percentage points above the 2.4% recorded in September, according to the US Bureau of Labor Statistics. Core inflation, which excludes food and energy, remained steady at 3.3% but showed a third consecutive monthly increase of 0.3%, signaling persistent underlying price pressures. October’s data comes at a critical point for the US economy, as the Fed weighs its next move ahead of President-elect Donald Trump taking office early next year.
But traders don’t see the rise in inflation hampering the Fed’s road to monetary easing: Traders are pricing in an 80% chance of another rate cut when the Fed meets next to decide interest rates in mid-December, Bloomberg reports. During its last meeting earlier this month, the Federal Reserve cut rates by 25 bps, after having kicked off its easing cycle in September with a half a percentage point cut.
Some are already warning that Trump’s policies could complicate the Fed’s fight against inflation: Trump’s reelection and his proposed policies — tariffs, tax cuts, and mass deportations — could potentially push inflation higher. Economists are concerned that such measures could fuel price pressures while adding uncertainty, making the Fed’s task of achieving a “soft landing” even tougher. (Financial Times | BBC | New York Times | Guardian)
Market reax: Two-year Treasury yields, which are more sensitive to Fed decisions, fell as much as 10 bps after inflation data was released.
BTC HITS ANOTHER HIGH-
Another day, another BTC peak: BTC hit a fresh high of USD 93.2k yesterday before reversing some of its gains to sit at USD 88.9k at midnight, driven by inflation concerns and a strong post-election rally. (Reuters | Bloomberg | CNBC)
The cryptocurrency has been on a Trump-driven rally since Trump was reelected to the Oval Office on 5 November. We dove deeper into the rally in a Planet Finance published earlier this week.
MARKETS THIS MORNING-
Asian markets are starting mostly in the green during early trading this morning, with Japan’s Nikkei up 0.5%, followed by Korea’s Kospi at 0.4% in the green, and Hong Kong’s Hang Seng at 0.1%. China’s Shanghai index is trading in the red at -0.1%.
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ADX |
9,372 |
-0.5% (YTD: -2.2%) |
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DFM |
4,733 |
+0.7% (YTD: +16.6%) |
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Nasdaq Dubai UAE20 |
3,918 |
+0.2% (YTD: +2.0%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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EIBOR |
4.6% o/n |
4.5% 1 yr |
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TASI |
11,931 |
-1% (YTD: -0.3%) |
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EGX30 |
31,433 |
-0.5% (YTD: +26.3%) |
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S&P 500 |
5,985 |
+0.02% (YTD: +25.5%) |
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FTSE 100 |
8,030 |
+0.1% (YTD: +3.8%) |
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Euro Stoxx 50 |
4,740 |
-0.1% (YTD: +4.8%) |
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Brent crude |
USD 72.28 |
+0.5% |
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Natural gas (Nymex) |
USD 2.98 |
-0.3% |
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Gold |
USD 2,586.50 |
-0.8% |
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BTC |
USD 88,897.70 |
+0.7% (YTD: +110.4%) |
THE CLOSING BELL-
The ADX fell 0.5% yesterday on turnover of AED 1.4 bn. The index is down 2.2% YTD.
In the green: Ghitha Holding (+3.1%), Abu Dhabi Ship Building (+2.8%) and Bank of Sharjah (+2.4%).
In the red: Umm Al Qaiwain General Investments (-3.9%), Abu Dhabi National Building Materials (-3.5%) and Al Dar Properties (-3.4%).
Over on the DFM, the index rose 0.7% on turnover of AED 784.3 mn. Meanwhile, Nasdaq Dubai closed up 2.0%.
CORPORATE ACTIONS-
International Holding Company’s AED 5 bn share buyback program will run until 19 June 2025, with the goal of boosting shareholder value through increased earnings per share, according to a bourse filing (pdf). Supported by strong cashflow, the Abu Dhabi conglomerate will cancel shares after repurchasing them. The program, launched in June , representing 0.6% of IHC’s total share capital, may be extended beyond one year pending ADX approval.
