Daily Market Commentary 12th October 2023

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US PPI came in hotter than expected, rising 0.5% for September, but this was brushed off by markets. US Bond Yields continued to drift lower, from recent highs, seemingly confirming that the Fed had inflation under control. Attention will turn to US CPI data, to confirm the inflation is cooling. German inflation tumbled back to 4.5%, proving that European inflation is well-off record highs, but there is stubborn pressure which may be aggravated by the rising winter energy prices. The Fed minutes were released, just before the US markets closed, and confirmed that there would probably be one more rate rise and that rates would remain higher for a longer period. This did little to upset markets, with the EUR trading around 1.0600, while the GBP heads towards 1.2300.

The recent market confidence and cooling of bond yields have occurred despite war exploding in Israel, which may be the hope that this conflict will not be too prolonged. The more settled reserve had the AUD trading around 0.6400, while the NZD toys with 0.6000. Markets will begin to focus on ECB monetary accounts and the latest US inflation reading.

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