Consumer Inflation, Cryptocurrency Deflation

Wall Street was rocked by the US midterm elections this week, but Wednesday’s big market losses were caused as much by the cryptoasset boom, serious problems in the tech sector and fears ahead of the key update. US inflation on Thursday.

Annual consumer price inflation is expected to have eased slightly last month to 8.0%, the lowest level since February, and core inflation is expected to fall to 6.5%. Falling used car prices, a factor weighing on inflation indices over the past year, will be closely watched – as will the relative calm of oil prices.

Oil extended its losses for a fourth day on Thursday as new COVID restrictions in China fueled concerns over fuel demand in the world’s biggest crude importer. Hurricane Nicole also weakened to a tropical storm as it tracked over Florida toward Georgia.

But despite all the tension in the markets around the release of inflation, any hope that the month-on-month data will change the Federal Reserve’s tightening trajectory has faded.

Minneapolis Fed President Neel Kashari said it was “completely premature” to discuss a change from the Fed’s current policy. “We are on the right track now: I think we are united in our commitment to reduce inflation to 2%.

This tightening will do nothing to help the sluggishness of the cryptocurrency world.

Cryptocurrencies wobbled on Thursday after a week of staggering losses and existential dread for the entire industry, as cryptocurrency exchange FTX is at risk of collapse now that rival Binance has pulled out of a last-minute bailout. Bitcoin, which has lost more than a quarter of its value since Saturday, fell below $16,000 for the first time in two years before stabilizing just above that level early Thursday.

Broader markets were broadly negative across the globe, largely in a pattern of anticipation ahead of the inflation report.

Since the Russian invasion of Ukraine this year worsened energy, inflation and the world economy, investors have been closely following developments and developments on the battlefield.reports of “discussions on discussions.”

In a major development on Wednesday, Moscow ordered troops to withdraw from near the strategic southern Ukrainian city of Kherson in one of the biggest setbacks of the war so far – even as Ukraine said it was doubtful Russian troops would leave. without war.

Reports of a move towards negotiations come ahead of the G20 summit in Indonesia next week. Russian President Vladimir Putin will not attend the summit in person, but host country Indonesia said Thursday he may attend a virtual session.

The United States and China also set milestones this week ahead of an expected summit meeting between their presidents.

Chinese stocks, however, fell again – largely due to concerns about COVID. Chinese authorities should take a more targeted approach to tackling the COVID outbreaks and avoid additional ‘layers’ of measures, state news agency Xinhua reported, as cities come under tighter restrictions as they go.

In Japan, you’re steady as Bank of Japan Governor Haruhiko Kuroda said any future discussion of an exit from the central bank’s ultra-loose monetary policy will focus on the pace of interest rate hikes. short-term interest rates and bank balance sheet adjustments.

In the banking sector, Credit Agricole shares fell 4% after the French bank missed third-quarter earnings estimates due to lower trading income and withdrawals at asset manager Amundi.

Key developments that could drive US markets later on Thursday:

* October US Consumer Price Index, Weekly Jobless Claims, October Federal Budget

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New York Federal Reserve Chairman John Williams Fed Board Governor Christopher Waller Philadelphia Fed President Patrick Harker Dallas Fed Chair Lorie Logan Kansas Fed Chair City, Esther George, Everybody Talks.

* 30-year US Treasury bonds auctions

* Results of American companies: Ralph Lauren, Tapestry, etc.

* Bank of Canada Governor Tiff Macklem speaks

CHART: US inflation and bond yields https://fingfx.thomsonreuters.com/gfx/mkt/gdvzqrxgbpw/One.PNG

CHART: Crypto deflation https://fingfx.thomsonreuters.com/gfx/mkt/jnvwygmokvw/One.PNG

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