Market Update – 10th November 2021.

After the explosions and excitement of bonfire night festivities over the weekend, markets have come up for air this week, and have broadly been flat.

Daylight savings time ended in the US on Sunday, giving citizens an extra hour in bed to brace themselves for the opening of US borders on Monday, allowing Brits to travel to the US for the first time in nearly 2 years.

The beginning of the week has been heavy with price data.

The Producer Price Index (PPI) measures a change in price that a seller pays for raw goods. Think of Consumer Price Index (CPI) – a measure of the price that consumers pay, while PPI is a measure of the price of input costs that producers pay.

On Tuesday, US PPI came in below expectations at 8.6%. With some of the large drivers of this reading being soaring gas prices, autos and auto parts, there were no big surprises to markets. In fact, these drivers confirm the Fed’s belief that price increases are driven by factors such as supply chain shocks, tied to the coronavirus pandemic. This gives us confidence that the Fed’s accommodativeness will resume.

Elsewhere, China’s Communist Party’s decision-making central committee met on Monday for its four-day closed-door meeting, which expects to pave the way for a third term for President Xi Jinping. PPI and CPI data were released for China this morning, showing higher than forecast levels in both the producer-price and consumer-price inflation reading. This shows that increased costs due to virus outbreaks and supply disruptions are being passed on to the consumer.

Later today, US CPI will be published which we (alongside markets) will be watching closely. Over the rest of the week, we will also be watching European CPI data, UK GDP and Eurozone Industrial production.

Hannah Owen, Portfolio Specialist