US stocks advanced at the start of a pivotal week for monetary-policy decisions from the Federal Reserve, European Central Bank and a host of their peers.
(Bloomberg) — US stocks advanced at the start of a pivotal week for monetary-policy decisions from the Federal Reserve, European Central Bank and a host of their peers.
The S&P 500 rose as much as 0.7% after the New York Fed released consumer survey data showing inflation expectations declined.
The tech-heavy Nasdaq 100 climbed after fluctuating earlier. Treasury yields rose, with the 10-year rate around 3.63%. The dollar advanced.
All eyes will be on the US consumer price index reading on Tuesday, which is expected to show prices, while still high, are continuing to decelerate.
A subdued CPI print would justify the Fed’s projected half-point move on Wednesday and shed light on whether markets can expect rate cuts in late 2023. While central bank officials have indicted a downshift, they have also emphasized that borrowing costs will need to remain restrictive for some time.
“We need to keep the optimism in perspective — we’ve just gotten back to the levels that prevailed before the late swoon on Friday,” said Steve Sosnick, chief strategist at Interactive Brokers.
“And yet again we bounced off the 100-day on SPX. There hasn’t been enough selling pressure to push us below it. But it does feel like there is some optimism regarding CPI. We shrugged off a bad set of PPI numbers, so I think there are many who think we could do the same regardless of outcome.”
Read: The 24 Hours of Hikes That End Year of Fighting Inflation
The S&P 500 posted its best post-CPI day ever in November after the inflation print came in slower than projected.
The US equity benchmark could rise as much as 5.5% on Tuesday — which will tie for the best CPI day ever — should headline inflation come in 0.2 percentage points below estimates on a year-over-year basis, according to an analysis from market maker Optiver.
Still, disparities in the economic outlook between the world’s regions, from the resurgence of Covid in China to energy volatility in Europe, have kept a lid on risk sentiment.
Following the Fed, the ECB will announce its rate decision Thursday, and may also opt for a 50 basis-point hike.
Markets also have to contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
Key events this week:
- US CPI, Tuesday
- FOMC rate decision and Fed Chair news conference, Wednesday
- China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday
- ECB rate decision and ECB President Lagarde briefing, Thursday
- Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
- US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.5% as of 1:04 p.m.
New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average rose 0.9%
- The MSCI World index fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.1% to $1.0529
- The British pound rose 0.1% to $1.2275
- The Japanese yen fell 0.8% to 137.65 per dollar
Cryptocurrencies
- Bitcoin fell 0.6% to $17,015.01
- Ether fell 0.9% to $1,253.75
Bonds
- The yield on 10-year Treasuries advanced five basis points to 3.63%
- Germany’s 10-year yield was little changed at 1.94%
- Britain’s 10-year yield advanced two basis points to 3.20%
Commodities
- West Texas Intermediate crude rose 3.6% to $73.58 a barrel
- Gold futures fell 0.9% to $1,794.60 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Srinivasan Sivabalan.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
