Markets hit pause as Biden travels to Middle East

Market reports
Lawrence Kaplin
  • GBP: UK inflation remains sticky
  • EUR: ECB “may require additional rate hikes”
  • USD: Retail sales surge

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UK headline inflation data for September released this morning came in unchanged from the previous month’s reading at 6.7%, prompting Chancellor Hunt to state “Inflation rarely falls in a straight line”. Markets had been looking for a dip from the previous month’s reading, but a steep rise in petrol prices negated the downward contributions from food and non-alcoholic beverages. This comes after yesterday’s employment data revealed a sharp fall in UK wage growth and leaves the Bank of England with difficult choices ahead of its upcoming rate-setting meeting slated for November 2nd.

Elsewhere, US Retail Sales data released yesterday came in much stronger than forecast, once again showing the US consumer is still very much alive and kicking and sending US 2-year Bond yields to their highest levels since 2006
We also heard from ECB’s Holzmann who stated additional rate hikes may still be required to bring down inflation.


Market rates

* Daily move - against G10 rates at 7:30am, 18.10.23

** Indicative rates - interbank rates at 7:30am, 18.10.23

Data points


  • FED Waller, Williams, Bowman, Harker, Cook
  • BoE Stheeman
  • ECB Elderson
  • Bundesbank Wuermeling

Our thoughts

Since the terrorist attacks on Israel, macroeconomic data has largely taken a back seat as markets await US President Biden’s visit to the Middle East. With the very real danger of other “actors” becoming embroiled Oil prices once again surged yesterday, accentuating fears of global inflation remaining at elevated levels. Despite interest rate meetings from the US, UK and EU all due within the next two weeks markets will likely continue to be dictated by Middle Eastern Geo-political events.

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