Stocks rise as markets await US inflation report

Traders are betting that CPI eased in October which should mean rates have peaked.

Global stocks and bonds edged higher ahead on speculation that a crucial U.S. inflation report will show that price pressures slowed last month, cementing the view that interest rates have peaked.

Europe’s Stoxx 600 index added 0.2%, with mining stocks led by a 4% gain in Glencore Plc after it agreed to buy a majority stake in Teck Resources Ltd.’s coal business for almost $7 billion. Vodafone Group Plc fell 1.7% after reporting weaker profits in southern Europe.

Equity futures also rose, with contracts on Nasdaq 100 advancing 0.3%. Treasury yields slipped two basis points to 4.61%. West Texas Intermediate futures climbed.

U.S. inflation probably eased to an annual rate of 3.3% in October from 3.7% in September, according to a Bloomberg survey of economists. However, core inflation which strips out energy and food costs, is predicted to be unchanged, implying slow progress toward the Federal Reserve’s 2% inflation target.

Michael Preiss, a portfolio manager at Das Family Office Pte Ltd., expects the figures will show sticky inflation, but added that “signaling from the Fed increasingly leads us to the belief that we are at the end of the tightening cycle.”

“Our base case is no rate cuts and no recession, which potentially means a year-end rally in global risk assets, especially equities,” Preiss said on Bloomberg Television.

Fed Vice Chair Philip Jefferson and Chicago Fed President Austan Goolsbee will also speak later in the day, and Home Depot Inc. reports earnings.

Traders are also watching to see how the US inflation data impacts the yen. Some analysts have said a stronger-than-expected print may push the Japanese currency to a 33-year low and potentially trigger an intervention by the central bank.

Japanese Finance Minister Shunichi Suzuki has warned repeatedly this week that the government will respond to excessive moves. The currency traded around 151.7 per dollar, close to falling past the 151.95 threshold.

Elsewhere in currency markets, the pound rose 0.2% in response to data showing UK labor markets is holding up well.

Earlier, MSCI’s Asia Pacific equity index advanced 0.3%. Chinese President Xi Jinping and his US counterpart Joe Biden are due to meet Wednesday on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco.

KEY EVENTS THIS WEEK

US CPI, Tuesday
Home Depot earnings, Tuesday
Fed Vice Chair Philip Jefferson, SNB President Thomas Jordan and ECB chief economist Philip Lane speak during conference in Zurich, Tuesday-Wednesday
Chicago Fed President Austan Goolsbee speaks, Tuesday
Bank of England chief economist Huw Pill speak during event, Tuesday
China retail sales, industrial production, fixed-asset investment, Wednesday
Japan GDP, industrial production, Wednesday
UK CPI, Wednesday
US retail sales, business inventories, PPI, Empire manufacturing, Wednesday
Target earnings, Wednesday
China new home prices, Thursday
US initial jobless claims, industrial production, Thursday
Walmart earnings, Thursday
US President Joe Biden and Chinese President Xi Jinping expected to speak at APEC leaders summit, Thursday
Cleveland Fed President Loretta Mester, New York Fed President John Williams and Fed vice chair for supervision Michael Barr speak, Thursday
Bank of England deputy governor Dave Ramsden and ECB President Christine Lagarde speak at event, Thursday
US housing starts, Friday
US Congress faces a midnight deadline to pass a federal spending measure, Friday
ECB President Christine Lagarde speaks, Friday
Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly speak, Friday