The DC Today - Wednesday, December 20, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 20 December 2023
⏱️ 7 minutes
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Summary
Today's Post - https://bahnsen.co/47gk0nS
A quiet day of trading as markets head towards the Christmas holiday on Monday and things slow down.
The US is one of many countries where inflation readings and projections are being reduced. The UK had a much lower-than-expected November inflation reading yesterday at 3.9% y/y versus a 4.3% expected and down from 4.6% the month prior. Not surprisingly, Gilt yields moved dramatically lower, and futures were priced in 150 bps of BOE rate cuts next year.
PPI data in Germany today was also below expectations. While the ECB noted it would maintain rates where they were last week, I expect that narrative to change next year if we continue to see numbers like this, especially once the US starts cutting. Global central bank policy, as does trade and currencies, tends to be tethered—this and more in today's video podcast.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:13.9 | Hello and welcome to DC today. It is the 20th of December here on Wednesday, and I had'd look at my calendar there, getting into the holiday season. |
| 0:23.5 | Focuses are starting to shift a little bit. And as we get closer to the Christmas holiday, which is on |
| 0:28.1 | Monday and into the new year. And things just slow down. And you saw that in markets today. |
| 0:32.7 | It was a slow, quiet day in trading. Rates were down a few basis points. You know, markets were basically |
| 0:38.5 | flat for most of the day. But all that said, there's some data overnight out of Europe that I |
| 0:46.2 | thought was worth noting. Yeah, inflation in the UK came in much lower than expected. It was 3.9%. |
| 0:52.6 | We were expecting more like 4.3, which is down from 4.6 the month prior. |
| 0:57.6 | The PPI in Germany was lower than expected to. |
| 1:00.2 | And I say some of these things across the pond because central banks are tethered to one |
| 1:05.2 | another. |
| 1:06.2 | And with inflation lower in the US and likely rate cuts in 2024, while the ECB telegraphed at least last |
| 1:13.1 | week that they were going to hold rates the same. And like I said last week, I don't, I don't think |
| 1:16.9 | that's realistic if the U.S. cuts significantly next year. Of course, with today's numbers, rates came |
| 1:24.5 | down a ton in the UK. The Giltz were trading at 354. |
| 1:28.2 | They were down like 12 basis points on the day. |
| 1:30.5 | So you're seeing the same phenomenon there as you are here. |
| 1:33.7 | And I frankly think it's a positive. |
| 1:36.0 | And I believe that central banks will tend to move in concert just like they did on the way up. |
| 1:41.3 | Not quite lockstep across the world, but pretty close to that. |
| 1:44.8 | And there's a lot of reasons. Currencies are affected by central bank policy. Higher rates |
| 1:50.0 | tend to have stronger currencies. And that affects trade, things like trade and the economy. And so |
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