All eyes on ECB decision and ARM IPO! | MarketTalk: What’s up today? | Swissquote

Show notes

Yesterday’s US CPI report was mixed, worse-than-expected and far from soothing. The headline inflation ticked from 3.2% to 3.7%, higher than the 3.6% expected, and core inflation came in at 4.3%, in line with expectations. But on a monthly basis, core inflation numbers was slightly higher than expected. The US 2-year yield was shortly above the 5% level yesterday but fell after the data, activity on Fed funds futures now gives 97% chance for a pause at next week’s FOMC meeting, but the probability of a pause in November is slightly less than before the data, at 56%.
Across the Atlantic Ocean, not earlier than the beginning of this week, the expectation for today’s European Central Bank (ECB) meeting was a no rate hike. Today, just a few hours before the meeting, the pricing is pointing at a 25bp hike as the most likely scenario; money markets are pricing in a 68% chance for a 25bp hike.
In the UK, the rate hike expectations are also strong but weak economic growth, rising unemployment, unfortunately coupled with rising wages hint that the BoE is also leaned to raise the rates. But the rate hikes that happen when economy slows doesn’t boost appetite for euro nor for sterling.
In equities, all eyes are on ARM that will go public today. The company set its IPO price to $51 a share. It’s at the top end of the proposed price range, but still lower than the valuation of $64bn when Softbank bought out a stake from Vision Fund.
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