More worrying inflation data, a U.S.-Asia reset, and Bitcoin is volatile again.
Monetary policy
U.K. inflation for October surged to the highest in a decade, according to this morning’s data, putting further pressure on the Bank of England to raise interest rates at its next meeting. Continuing strong economic data in the U.S. is also intensifying market positioning for tighter Federal Reserve monetary policy. The dollar is holding near a one-year high and the 10-year Treasury yield remains over 1.6%. Bond market attention will be on today’s 20-year auction and any clues on who will be leading the Fed, with a decision due very soon. Further adding to concerns is the re-emergence of the debt-ceiling deadline.
New Economy Forum
While inflation is also a topic of concern at the New Economy Forum in Singapore — with heads of some of the world’s biggest banks predicting uncertainty ahead — much of the conference has been concerned with geopolitical issues. U.S. Commerce Secretary Gina Raimondo said America intends to initiate a new economic framework for the Indo-Pacific region in 2022, adding that it is clear people in the region want the U.S. to rejoin the CPTPP. Chinese Vice President Wang Qishan, also speaking at the event, vowed that Beijing will continue to open up to foreign investment saying that “China cannot develop in isolation.” There were also calls from rich nations to spend more money on climate mitigation in developing nations.
Reversal
Bitcoin’s drop yesterday below $60,000 amid a broader selloff of cryptocurrencies is again highlighting volatility of the asset class. U.S. banking watchdogs are set to get even more cautious on digital tokens. Michael Hsu, the acting chief of the Office of the Comptroller of the Currency, is signaling a far from friendly stance on the industry in an upcoming review. Bitcoin is having another jumpy session, dropping as low as $58,500 before recovering some ground.
Markets quiet
Despite all the concern about inflation and monetary policy, global equity markets are having a relatively subdued session. Overnight the MSCI Asia Pacific Index dropped 0.5% while Japan’s Topix index closed 0.6% lower. In Europe the Stoxx 600 Index had gained 0.1% by 5:50 a.m. Eastern Time with travel stocks by far the biggest decliners. S&P 500 futures pointed to a little change at the open, oil slipped below $80 a barrel amid concerns both China and the U.S. would tap reserves, and gold rose.
Coming up...
U.S. housing starts and building permits data for October is at 8:30 a.m. Canadian CPI for the month is also at that time. The auction of $23 billion of 20-year Treasuries is at 1:00 p.m. There are seven Federal Reserve policy makers scheduled to speak today. Bloomberg’s New Economy Forum continues in Singapore. Nvidia Corp., Cisco Systems Inc., Target Corp. and TJX Cos Inc. are among the companies reporting results.
What we've been reading
Here's what caught our eye over the last 24 hours.
And finally, here’s what Joe’s interested in this morning
The main thing on my mind this morning is U.K. inflation. Core inflation is at its highest in almost a decade. Meanwhile, another measure of prices, the Retail Price Index just saw its fastest gains since 1991. What's interesting too is that the U.K. didn't have that extra boost of stimulus that the U.S. did. And BoE communication has been significantly more hawkish than the Fed's. And yet...
So anyway, no real point. Just thought it was interesting.
Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart
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