Market inflation continues, UK and US interest rate hikes are imminent

[UK Chancellor of the Exchequer Hunt delivers autumn fiscal report to British Parliament]

Today we presented a plan to tackle the cost of living crisis, with stability, growth and public services as the top priorities, will take tough decisions to tackle inflation, will outline a plan to rebuild the economy, and plan to lead to a 'minor' recession , lower energy bills, the Office for Budget Responsibility (OBR) says "global factors" are the main cause of inflation, we will not change the role of the Bank of England, the Bank of England has done a fantastic job, got my heart support, the government and the BoE need to be in lockstep.

[The market may lift the expectation that the Bank of England interest rate will peak]

Commonwealth Bank of Australia: The market may unwind expectations of a peak in Bank of England interest rates, which will support the pound; Chancellor of the Exchequer's fiscal plan may be less stimulating than the earlier 'mini-budget', and may even shrink.

[High inflation may increase the risk of raising interest rates by 75 basis points next month]

Higher-than-expected UK inflation could increase the risk of the Bank of England raising interest rates by 75 basis points next month. The market currently expects a 43% probability of a 75 basis point rate hike. If the inflation data is still high, it will promote the expectation of raising interest rates by 75 points, which may give the pound a boost. And if the data is low, it may stop the pound's rebound in this round.

[The market expects that UK inflation will not continue to be high]

The October CPI data in the UK was higher than expected, but the market reaction was flat, and the pound basically did not fluctuate much. Markets appear to be emerging from the "shadow" of rising inflation and looking ahead to the next phase, in which inflation remains elevated but has peaked. As in the US, leading indicators in the UK also suggest that inflation is about to peak and start to fall.

[American consumers dare to spend money]

Tightening monetary policy appears to be dampening overall demand and weighing on the labor market and the economy, with U.S. consumers' buoyant willingness to spend expected to fade next year. Low-income households are believed to have depleted the savings they gained during the pandemic. U.S. consumers don't yet appear to be feeling the brunt of higher prices and borrowing costs amid the massive savings accumulated during the coronavirus pandemic and strong wage growth amid a tight labor market.

[The Fed may raise interest rates to more than 5%]

The Fed has raised its policy rate by 375 basis points this year to a range of 3.75%-4.00% from near zero to fight rampant high inflation. The Fed is raising interest rates at its fastest pace since the 1980s. Fed Governor Waller said he felt "more comfortable" with a slower pace of future rate hikes, but would not pre-empt actions at the Fed's December policy meeting. How high rates ultimately need to rise depends on how inflation slows.

[Social Ginger says dollar bulls are under pressure]

Societe Generale said: "Dollar bulls are feeling the pinch. We are in the process of peaking inflation, although some serious tail risks remain. Fed rate hikes priced in, bond yields higher; slow reopening in Asia; Emerging markets are turning a corner, offering attractive entry levels for currencies and bonds.