DBG-September 14 Financial Breakfast

September 14DBG ForexBrought to you today's financial breakfast - U.S. stocks, bonds and the dollar saw minor fluctuations on Wednesday (September 13), as mixed inflation reports reinforced expectations that the Federal Reserve will pause interest rate hikes, but that did not mean the end of the tightening cycle. The core CPI, which excludes food and energy, rose 0.3% month-on-month in August, slightly better than the 0.2% increase expected by Dow Jones survey economists, according to Labor Department data. The figure rose 4.3% from a year earlier, in line with expectations.

On Wednesday (September 13), U.S. stocks, bonds, and the dollar saw minor fluctuations, with mixed inflation reports strengthening expectations that the Federal Reserve will pause interest rate hikes, but this does not mean the end of the tightening cycle.

S&P 500 IndexLittle changed. The Dow Jones Industries Average Index performed poorly. American Airlinesoil priceThe rise and the downgrade in earnings forecasts sent its share price lower and it was the worst performer in the industry. Meanwhile, the CEOs of five of the top 10 largest U.S. companies attended a closed-door Senate meeting to set regulatory policy for artificial intelligence.

bienniumTreasury yieldSwap prices associated with the next two FOMC meetings continue to reflect a slim chance of a rate hike next week, compared with a roughly 50% chance of a rate hike in November.

Due to the strengthening of the dollar, the price of gold fell slightly, and the market expects the Federal Reserve to keep interest rates unchanged at its policy meeting next week, limiting the room for gold prices to decline.Spot goldIt fell 0.19% to $1,908.05 an ounce. It recovered some of its losses after the release of U.S. consumer price index (CPI) data for August.

Core CPI, which excludes food and energy, rose 0.3% month-on-month in August, slightly ahead of the 0.2% increase expected by Dow Jones survey economists, Labor Department data showed. The figure was up 4.3% from a year earlier, in line with expectations. Overall data rose 0.6% last month, in line with Dow Jones' expectations. Overall prices rose 3.7% year-on-year, ahead of economists' expectations of 3.6%. Core consumer prices accelerated month-on-month for the first time in six months. Year-on-year also saw the smallest increase in nearly two years. But it was still above the Federal Reserve's 2% target.

Krishna Guha, analyst at Evercore ISI, said: "While this report is not a surprise in terms of policy, it is not a disaster either. It is not a great CPI report, but it does not change the Fed's underlying outlook. The Fed is not keen to raise rates again, we think it will take more to get the FOMC to actually raise rates again, and we basically judge the Fed to have done its job."

Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, said the CPI data was not the ideal scenario the market would like to see, but the market could still trade within a range. Inflation is high enough that the Fed still needs to act, but not high enough to change the "Fed is almost done" storyline. He noted that as long as the economy remains resilient and inflation stops rising, the market can rebound at the end of the year, especially after the typically weaker quarters of September and October.

Morgan Stanley analyst Mike Loewengart believes that today's CPI report may have disappointed some people as they hoped inflation would weaken significantly. But consideroil priceSoaring and recent strong economic data, with data largely in line with expectations, could be seen as a small win. He believes there will still be volatility ahead, but the Federal Reserve still plans to keep interest rates unchanged after next week's policy meeting.

Damian McIntyre, alternative equity portfolio manager at Federated Hermes, said that today's U.S. CPI report did not have a significant impact. The data may give the FOMC another pause in rate hikes in September, but it does not provide a clear clue about the Fed's actions after that. He expects that in the fall, the Fed may issue contradictory statements and a consensus on the best path forward is unlikely to be reached, which could lead to controversy at the November meeting.

John Leiper, chief investment officer at Titan Asset Management, said the data did not have much of an impact on the market, which still expects the Fed to leave rates unchanged at its next meeting. The market is likely to price in the possibility of another rate hike this year.

Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors, said that while the data won't change the market and their expectations for the Fed to leave its target federal funds rate unchanged at its September meeting, the slightly higher-than-expected data could affect the tone of the press conference and summary of the economic outlook. They think the last rate hike of the cycle is likely already on the horizon, as the economic data the Fed will see in the coming months will keep them on the sidelines, thereby slowing the economy and inflation.

Florian, an analyst at Lombard Odier Asset Management, said the inflation report made the Fed feel more comfortable with a wait-and-see approach. Inflation was slightly higher than expected this time, but mainly due to fluctuations in energy prices, the Fed should not be too concerned at this time.

Seema Shah, chief global strategist at Principal Asset Management, said the inflation report may not be enough to change the Fed's decision on whether to raise interest rates at next week's meeting, but it also does not fully address the question of whether the November meeting will raise interest rates.

oil priceWednesday was close to flat, having earlier hit a 10-month high, as an unexpected build in U.S. crude inventories overshadowed expectations of tight supplies for the rest of the year.

Brent crude futures, an international benchmark, fell $0.18 to settle at $91.88 a barrel, after trading as high as $92.84, the highest level since November.

U.S. crude oil futures edged up 0.07 percent to close at $88.83 a barrel, an intraday high of $89.64, also the highest level since November.

Thursday Focus, Weathervane:

20:15 ECB refinancing rate

20:30 U.S. retail sales in August (monthly rate)

U.S. producer price index for August (annual rate)

The number of initial jobless claims in the United States after last week's quarterly adjustment

Analysis of major currency trends:

EUR: EUR/USD closed lower at 1.0729, down 0.23%. Technically, the preliminary resistance to the upside of the exchange rate is at 1.0758, further resistance is at 1.0788, and key resistance is at 1.0812; the preliminary support to the downside of the exchange rate is at 1.0704, further support is at 1.0680, and more critical support is at 1.0650.

GBP: GBP/USD was flat, closing at 1.2489, up 0.02%. Technically, the preliminary resistance to the upside of the exchange rate is at 1.2520, further resistance is at 1.2555, and key resistance is at 1.2598; the preliminary support to the downside of the exchange rate is at 1.2442, further support is at 1.2398, and more critical support is at 1.2364.

Yen: USD/JPY ended higher at 147.454, up 0.25%. Technically, the preliminary resistance to the upside of the exchange rate is at 147.73, further resistance is at 148.103, and the key resistance is at 148.463; the preliminary support to the downside of the exchange rate is at 146.997, further support is at 146.637, and more critical support is at 146.264.