Market Review: October 11, 2024

The economic data released on October 11, 2024, reflects a mix of inflation stability, softer producer prices, and declining consumer sentiment. Producer Price Index (PPI) data hints at easing inflationary pressures in the production sector, while consumer sentiment indicators show weaker expectations, potentially reflecting economic uncertainty. Additionally, speculative positions data and rig counts provide insights into energy market trends.

Today's Event Overview

• Core PPI (MoM) (Sep) remained at 0.20%, matching expectations but down from the previous month’s 0.30%. This signals stability in core producer prices, with reduced inflationary pressures from producers.
• PPI (MoM) (Sep) registered at 0.00%, below the forecast of 0.10% and the prior 0.20%. This suggests that producers are absorbing higher input costs, which may slow inflation from the supply side.
• Michigan 1-Year Inflation Expectations (Oct) came in at 2.90%, higher than the forecast and previous reading of 2.70%, indicating a slight increase in consumers' short-term inflation expectations.
• Michigan 5-Year Inflation Expectations (Oct) stayed at 3.00%, aligning with forecasts but down from the previous 3.10%. This points to longer-term inflation expectations remaining stable but moderated.
• Michigan Consumer Expectations (Oct) dropped to 72.9 from the previous 74.4, missing the forecast of 75, signaling weakening consumer outlooks about the future economy.
• Michigan Consumer Sentiment (Oct) decreased to 68.9, below both the forecast of 70.9 and the previous 70.1, reflecting deteriorating consumer confidence.
• U.S. Baker Hughes Oil Rig Count increased slightly to 481 from 479, indicating modest growth in oil exploration activity.
• U.S. Baker Hughes Total Rig Count rose to 586 from 585, suggesting stable energy production activity.
• CFTC Crude Oil Speculative Net Positions increased to 190.6K from 159.6K, signaling heightened bullish sentiment among oil traders.
• CFTC Gold Speculative Net Positions fell to 278.2K from 299.9K, suggesting reduced speculative interest in gold.
• CFTC Nasdaq 100 Speculative Net Positions dropped to 13.3K from 16.1K, indicating waning bullish sentiment in tech equities.
• CFTC S&P 500 Speculative Net Positions declined to -5.6K from 7.5K, reflecting increased bearish sentiment in the broader equity market.

Impact Analysis

• Impact on USD: The mixed inflation expectations, combined with stable core PPI and flat PPI readings, create a neutral-to-bearish environment for the USD. While inflationary pressures from producers seem to have eased, rising consumer inflation expectations could undermine confidence in the Fed's ability to control inflation. Weakening consumer sentiment further adds to concerns about economic growth, potentially weighing on the USD.
• Impact on Gold: The drop in speculative gold positions indicates waning investor interest, though rising inflation expectations could provide some support for gold as a hedge against inflation. Weak consumer sentiment also adds to the potential demand for safe-haven assets like gold. However, the overall sentiment remains mixed to bearish due to the reduction in speculative interest.
• Impact on Equity Futures: Weak consumer sentiment and lower-than-expected inflation data could weigh on equity futures, as they suggest deteriorating economic conditions. The decline in speculative positions for Nasdaq 100 and S&P 500 futures reflects increasing investor caution. However, the reduced inflation from the PPI readings could be supportive for equities in the longer term, as it alleviates pressure on corporate input costs.

Today’s data underscores the challenging environment faced by markets, with softening consumer sentiment and mixed inflation signals creating uncertainty. Producer inflation appears to be moderating, but consumer expectations for inflation remain elevated, which could complicate the Federal Reserve's policy outlook. Speculative position data shows reduced confidence in gold and equity markets, while the energy sector remains relatively stable, with modest increases in rig counts.