Markets Live: CPI Preview; Yen; Copper

By | January 12, 2023

Mark Cudmore and Anna Edwards break down today’s key themes for analysts and investors on “Bloomberg Markets Europe.”

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Let's talk about the markets in three Minutes then Mark and let's of course Start with the data point of the day We'll return to this theme a number of Times through the hour but in terms of CPI some people are watching a month for A moderation in core CPI so I'm watching Core Services really closely Um some are watching for any clues of Course as to whether this means 25 or 50 Basis points in February what's going to Be key and in focus for you when this Data hits later on today So I think probably the main message That even kind of from the way you Phrase that is everyone is expecting a Soft print the whisper number is for low Expectations and I think Bloomberg Economics has been exceptional over the Last year or so and has outperformed the Street in a difficult economic Environment and Bloomberg economics Expect a soft print today kind of Validating The Whisper number out there I think if we get a beat it would be a Massive shock to the market so the Expectation is that we're going to miss What is official the official median Because even the late forecasts are Lower than the current median it's Because people have been consistently Downgraded their kind of expectations For today so I think that effort to Really see as a soft print it would have

To come in quite a bit below Expectations there's also though a Knowledge that the FED over the next 26 Hours will push back but this is the Moment all week has been a market that Wants to sell the dollar that wants Yields to go lower that wants to play The deflationary theme and that's been Very clear in the price section I'm in The camp that that might get a little Bit cleaned out because there's any risk Of surprise today but I have to say Certainly the the market seems to be Skewed against me at the moment Right yeah it certainly does make things A little nervy doesn't it going into the Print knowing that so many in the market Expect a certain thing to happen what About what's going on in the year you Referenced it then whilst talking about The GMM Mark we've seen some big decent Moves in the Yen do you think this is Overdone though in the short term I know That you've been somebody who has been Expecting the boj to change course on Monetary policy and of course we saw a Little tweak to policy in December that Set the stage for more changes to come But do you think the market expects too Much in the very short term Yes I think that the the Market's Consensus here is very strong and the Logic is absolutely spot on it is the Idea that inflation will come to Japan

Too we've already seen signs that over The last few months but it is going to Be a kind of come through in a Sustainable way we're going to get those Wage increases the Japanese economy will Hold of okay and the bank of Japan will Be forced to capitulate on policy and Remove its yield curve control I'm with The market there absolutely I think what Happened this year the problem is the Market is selling dollar Yen Aggressively going into the start of the Year on the basic on the back of this Logic but the bank of Japan might not Change policy for a number of months Still which leaves the fact that Everyone is selling dollar Yen on a move Or for a reason that's maybe potentially Many months away quite dangerous now if You add the extra layer that buying yen Is actually disinflationary deflationary For Japan and makes it less like the Baggage panel move it means that getting Premature and the timing actually makes It less likely to come sooner so I think That moves dangerous I think that the Yen consensus long will suffer badly in The next few weeks again though okay and Streams seem to be battling a majority Here Just just a brief word on copper I mean It's one of the Commodities that has Been responding to the reopening trade In China

Yeah look absolutely I think this is Validating there's a real economic push There I have heard Um speculation that it might be about Some specific position cleaning out but I think it is a very very important real World kind of validation that the people Who at least trade that asset think that China's reopening is going to be very Strong economically and not going to Suffer too much disruption from the Health consequences of the covert wave Yeah absolutely we wait for any updates There more on China later in the program Uh thanks to mark for his thoughts so Far mlib go is the function to use if You want to get on top of the Market's Live blog there you'll find plenty of Coverage of the CPI print later today And anything else that is moving markets