Morning Minutes

Inflation Impact Continues To Drive Market Action




With yesterday’s US consumer price report indicating that inflation remains high and continues to rise, pressure on the Fed to take more aggressive action to rein in prices continues to grow. One factor behind the current market slide is that the US 10-year treasury note yield broke through the 2.00% barrier yesterday, which is based on a round number and several central banks’ long-term interest rate and inflation target.

With this move, US futures have started to price in the possibility of a 50-basis point hike sometime soon, particularly after St. Louis Fed President Bullard suggested that 1.00% in rate hikes are possible by July and left the door open to moves between scheduled meetings if needed, indicating that at least some FOMC members are leaning quite hawkish.

Yesterday’s US market selloff that saw the S&P 500 drop 1.8% and the NASDAQ dive 2.1% appears to have stopped for now with US index futures flat. It remains to be seen, however, who willing traders are to hold positions through the weekend or if prices have fallen enough to attract bargain hunters.  European markets are still under pressure today with the Dax down 0.3% and the FTSE falling 0.6%. The US Dollar continues to rise, gaining 0.6% against Bitcoin, 0.4% against Gold and 0.3% against the Euro. Commodity market action is mixed. WTI crude oil is up 1.5% but copper is down 2.4%.

It’s a relatively quiet day for economic and corporate news. Next week, earnings season continues, especially in Canada with several miners and retailers set to report results. Inflation remains the headliner on the economic side with producer, consumer and real estate price reports due from several countries including the US, Canada, China and the UK.

SIA Wealth In The Media:

Chief Market Strategist Colin Cieszynski appeared on BNN Bloomberg today where he discussed current tactical rotation and relative strength in retailing, the housing market, and what happened to the Santa Claus Rally this year.

Investors should adopt a tactical approach to the market: Colin Cieszynski

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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