On February 10, the U.S. Bureau of Labor Statistics released data showing that the CPI rose 7.5% year-over-year in January, accelerating again, the highest level since March 1982, higher than the expected value of 7.3%, but also higher than the previous value of 7.0%. This is the ninth consecutive month that the data has reached or exceeded 5%. January CPI growth unexpectedly expanded to 0.6%, expected to increase by 0.4%, the previous value was an increase of 0.5%.
OPEC crude oil production
Oil inventories in the OECD’s biggest consumer fell in December as crude supplies continued to lag behind strongly growing global demand, OPEC said on Thursday, Feb. 10, local time, straining an already stretched global energy market. In addition, OPEC’s report also showed that the organization’s oil production in January failed to meet its pledged output.
On the production front, OPEC’s latest monthly report noted that OPEC crude oil production increased by 64,000 bpd to 27.98 million bpd in January, well below the 250,000 bpd increase promised in the OPEC+ agreement. While this is somewhat seasonal, it also reflects a lack of growth in drilling activity and relatively limited short-term idle capacity.
Market expectation on FED
Current pricing in the money market suggests that the market expects the Fed to raise rates by a cumulative 100 basis points during the next three meetings. On Thursday, Feb. 10 EST, the swap rate market once expected the policy rate federal funds target rate to rise to 1.12% after the Fed meeting this June, more than 100 basis points higher than the current effective real rate of 0.08%.
This means that the Fed may have to raise rates by 50 basis points in March, May and June at one of its meetings, which is twice as much as a regular rate hike of 25 basis points, and that will be the first time since 2000 that a meeting decided to raise rates by 50 basis points. If the Fed sticks to the pace of one 25 basis point hike, it will have to meet temporarily and urgently within the first half of the year for an additional 25 basis point hike in addition to the existing firm schedule.
U.S. jobless claims continued to fall last week, reflecting the fact that the labor market appears to have shaken off the temporary disruption caused by the Omicron variant strain.
Data released by the U.S. Department of Labor on Thursday showed that the number of first-time jobless claims for the week of February 5 in the United States was 223,000, compared to market expectations of 230,000 and down 16,000 from the previous value of 238,000. This is the third consecutive week of improvement in the first application data so far this year, and the lowest level since the end of December last year.
The S&P/ASX200 is lower today, dropping 74.20 points or 1.02% to 7,214.30. The bottom performing stocks in this index are LIFE360 INC. and APPEN LIMITED, down 8.13% and 7.68% respectively.
Magellan Financial Group has disclosed $5.5 billion net outflows since January 1, of which $5 billion are institutional and half a billion are retail.
Of that, $3.6 billion are in the redemption process, and $1.9 billion worth are intentions to redeem up to 9AM this morning. Magellan’s funds under management as of February 9 stand at $87.1 billion down from its last update for January 31 of $93.5 billion, and includes market movements.