Bassanese Bites: CPI test – November 07 2022
Week in review
Global equities tried hard to continue to rally last week while the US Fed tried hard to prevent that from happening. The Fed hiked rates by 0.75% as widely expected, and hinted at a likely scaling back to a 0.5% (or even 0.25%) rate increase at the December meeting. But this potential ‘pivot’ good news was offset by Fed chair Powell warning that the ultimate peak cash rate could go higher than the near-5% rate projected by the Fed back in September and, either way, the Fed still likely has “some ways to go” in hiking rates.
Further mixed messages came from Friday’s US payrolls report, with a much higher than expected gain in employment and still uncomfortably high rate of wage growth (albeit no worse the expected) – despite there also being a surprise lift in the unemployment rate from 3.5% to 3.7%.
In other key news, a report on Friday (US time) briefly raised hopes that China would try to extricate itself from its zero-COVID policy, though this was denied by officials over the weekend.
All up, US equities were down for the week – correcting after two weekly gains – while US 10-year bond yields consolidated above 4%.
