LGT Navigator

Inflation in the US continues to decline - Fed interest rate decision expected

Inflationary pressure in the US weakened further in November. Nevertheless, the Federal Reserve (Fed) is likely to leave key interest rates unchanged this evening (20:00). However, the financial markets are eagerly awaiting signals on the future direction of US monetary policy. On Wall Street, the recent fall in inflation in the run-up to the Fed's interest rate decision was greeted positively. In Asia, Chinese shares recorded losses on Wednesday, while the Bank of Japan's Tankan survey led to slight price gains on the Tokyo Stock Exchange. 

Alessandro Fezzi, LGT
Reading time
5 minutes
© Shutterstock

In the United States, inflationary pressure is continuing to ease. In November, consumer prices rose by 3.1% compared to the same month last year. In October, the inflation rate was still 3.2%. The inflation rate in the US peaked at 9.0% in mid-2022. The decline was largely expected on the markets and was mainly due to lower energy prices. Year-on-year, energy prices fell by 2.3% (petrol -6% and heating oil -2.7%). The core inflation rate, i.e. excluding energy and food prices, remained unchanged year-on-year at 4.0% in November, but rose by 0.3% compared to the previous month.

Inflation data from the USA barely moved the stock markets on Tuesday, in the run-up to the Fed's interest rate decision. The Dow Jones Industrial rose by 0.48% to 36,577.94 points, marking another high since the beginning of 2022. The broad market S&P 500 rose by 0.46% to 4,643.70 points and the Nasdaq indices also closed at a new high for almost two years. On the bond market, the yield on ten-year Treasuries remained virtually unchanged at 4.21%.

Among the individual stocks, Oracle shares remained under pressure and recorded a slump of over 12%. The software company had previously reported lower-than-expected sales growth in the second quarter. The pace of growth slowed for the second time in a row, particularly in the important cloud business.

In Asia, the Chinese mainland index CSI 300 lost around 1.3% on Wednesday and the Hang Seng Index in Hong Kong fell by 1%. In Seoul, the South Korean Kospi also fell by just under 1%. In Tokyo, however, the Nikkei 225 recorded a daily gain of 0.3%. The Bank of Japan's quarterly business survey, the so-called Tankan report, showed that business confidence among large manufacturers improved more than expected in the fourth quarter, with the index rising from plus 10 to plus 12. At the same time, the index for sentiment among large non-manufacturing companies rose from plus 27 to plus 30, marking the seventh consecutive quarter of improvement.

Corporate news in focus: Inditex 9-month figures, Metro AG, annual report.

Economic data in focus: Germany foreign trade October (detailed results, 08:00), UK GDP, industrial production and trade balance October (08:00), Switzerland KOF and Seco economic forecasts (09:00), Eurozone industrial production October (11:00), USA producer prices November (14:30), FOMC interest rate decision (20:00), Fed press conference and economic forecasts (20.30).



LGT helps you make informed investment decisions

All about global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

Contact us