The European equities surged on somewhat stabilised oil and commodity prices.
The US inflation figures matched the market expectations in November. The headline inflation remained flat, while once the impact of food and energy prices discounted, the prices inflated 0.2% on month. Given the cheaper energy and oil prices, the Fed may have some additional difficulty to lift the consumer prices to their 2% target soon enough, nevertheless the price in services appear to counterweight the deflation in the energy and commodity complex. And this is good news for the Fed preparing to raise its interest rate by 25 basis point for the first time since 2006.
The better-than-expected empire manufacturing read is an additional support for the Fed. It is the first time since July that the empire manufacturing has beaten the market expectation.
The sovereign market priced in 78% chances for a 25 basis point hike. The Fed will certainly temper the hawkishness of the rate tightening by a fairly dovish accompanying statement.
The US equity futures have followed the lead of Europe and we call
- the S&P 500 18 points higher to 2039.60
- and the Dow 112 points higher at the open to 17490.