CPI inflation report, consumer sentiment update, U.K. GDP
U.S. equity markets rose on Friday following a stronger-than-expected jobs report, but fell for the week after the Federal Reserve conducted its sixth consecutive interest rate hike this year, raising borrowing costs to their highest level since 2008. For the week, the Dow fell 1.4%, the S&P 500 shed 3.3%, and the Nasdaq tumbled 5.6%. Treasury yields rose, with the yield on the 10-year note at 4.2%, while two-year yields climbed above 4.7%, as the inversion of the yield curve deepened. Crude oil prices rose, with West Texas Intermediate (WTI) crude trading above $92 per barrel on Friday—its highest level since late August, on expectations China could ease pandemic restrictions, while global supply remains tight.
With roughly 80% of S&P 500 companies having reported their earnings so far, investors can expect a more subdued pace of earnings releases next week. Some large companies scheduled to report include The Walt Disney Company, AstraZeneca, BioNTech, Activision Blizzard, DuPont, and Norwegian Cruise Line, among others. The October CPI inflation report on Thursday could offer clues on the recent trajectory of consumer prices and how it could impact the Federal Reserve’s monetary policy agenda. On Friday, the University of Michigan will release its preliminary Consumer Sentiment Index (MCSI) for November, providing a key update on consumer confidence. Market watchers can also expect economic updates from the U.K., as the Office for National Statistics will release preliminary GDP figures for the third quarter.
KEY TAKEAWAYS
The Walt Disney Company, AstraZeneca, BioNTech, Activision Blizzard, DuPont, and Norwegian Cruise Line are among the companies reporting earnings next week
The Bureau of Labor Statistics (BLS) will release the October Consumer Price Index (CPI) on Thursday, providing the latest update on inflation in the U.S.
The University of Michigan will release the preliminary November reading of its Consumer Sentiment Index (MCSI), providing an important update on consumer confidence
The U.K.'s Office for National Statistics will release third-quarter GDP figures for the U.K. on Friday
The Latest Update on Inflation
On Thursday, the Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) for October. Economists are projecting consumer prices rose 0.7% from a month earlier, accelerating from a 0.4% gain in September. On an annual basis, prices likely rose 8% from a year ago, decelerating slightly from an 8.2% gain in September. Core inflation, which strips away volatile food and energy costs, likely rose 0.5% from a month earlier. Year-over-year, core inflation is expected to hit 6.7%, accelerating from 6.6% in September and reaching a new 40-year high.
Is Consumer Sentiment Improving?
Next Friday, the University of Michigan will release the preliminary November reading of its Consumer Sentiment Index (MSCI)—a key barometer of consumer confidence in the U.S. The index is projected to show a reading of 60, which would mark a slight improvement from 59.9 recorded in October. Consumer sentiment has languished near multi-decade lows in recent months, as high inflation, rising borrowing costs, and an economic slowdown continue to impact U.S. households. The MCSI hit an all-time low of 50 in June, with overall pessimism surpassing that of the Great Recession in 2008 and the stagflation era of the 1970s and early 1980s.
A GDP Report From the U.K.
Also on Friday, the U.K.’s Office for National Statistics will report the advance estimate for U.K. gross domestic product (GDP) for the third quarter of 2022. The Bank of England (BoE) projects that U.K. GDP contracted 0.5% in the three months ended September, following a 0.2% advance in the second quarter of the year. The U.K. economy could be on the brink of a recession, as rising inflation, slowing growth, and a cost of living crisis impact the economy. To combat rising inflation, the Bank of England recently raised its benchmark interest rate by an additional 75 basis points (bps) on Thursday, conducting its largest rate hike in 33 years and raising rates to their highest level since 2008.