A look at the day ahead in U.S. and global markets by markets
correspondent Naomi Rovnick.
The ghosts of inflation past, present and future are
haunting global markets on Wednesday as the U.S. October
consumer prices report due later in the day threatens to raise
fears about what President-elect Donald Trump's tax and tariff
policies will bring.
Economists polled by Reuters expect U.S. year-on-year
inflation rose to 2.6% last month, adding to prospects of
high-for-longer interest rates that have sent two-year Treasury
yields to their highest since July as the dollar stands tall.
A potential return to the inflation angst that dominated
markets through 2022 and 2023 means the latest equity market
rally, driven by Trump's anticipated business deregulation and
tax cuts, looks vulnerable.
Asian markets sagged on Wednesday, Wall Street futures imply
another edge down from record levels hit last week and Europe's
Stoxx 600 share index is flat.
Bitcoin has eased about 0.8% after its post-election surge
close to $90,000.
The euro, one of the major victims of Trump
trades, is on course for its fourth consecutive daily drop on
Wednesday after briefly falling trade below $1.06, around its
weakest in a year.
But while markets are gripped by expectations Trump will
hike government borrowing and raise consumer prices with 60%
import tariffs on China, he could move more cautiously.
Voter anger about inflation, which rose about 20% in four
years, was one reason for Trump's resounding election and
sustained price rises could be politically toxic.
The President-elect also wants to slash what he views as
wasteful government spending and has tasked Tesla billionaire
Elon Musk with leading an efficiency drive.
Elsewhere in markets on Wednesday, a Japanese bond selloff
driven by rate hike expectations has taken five-year yields to a
15-year high and the yen has dropped beyond 155 per dollar,
around its weakest since July 30.
Sterling, almost 7% lower in two months, remains in the
spotlight ahead of finance minister Rachel Reeves and Bank of
England Governor Andrew Bailey's closely-watched Mansion House
speeches on Thursday.
Key developments that could influence markets on Wednesday:
-US CPI (Oct)
-Dallas, St Louis, Kansas City Fed chiefs speak at separate
events
-BoE's Catherine Mann speaks
(Editing by Christina Fincher)