US CPI data, the most widely used measure of inflation in the US, increased 0.3% in December, above market expecations of 0.2%. For 2023, CPI ended at 3.4%, slightly above expectations for a y-o-y reading of 3.2%, CNBC reported. Core inflation, meanwhile, was roughly in line with expectations, up 0.3% in December, and 3.9% y-o-y versus market estimates of 0.3% and 3.8%.
In the US, the week of Jan 15-19 will be shorter because of Martin Luther King day on Jan 15. Nonetheless, there are several FOMC voters speaking this week including Fed Governors Waller (16 Jan 16), Bowman (Jan 17) and Barr (Jan 17 and 19), New York Fed President Williams (Jan 17) and Atlanta Fed President Bostic (Jan 18 ). San Francisco Fed President Daly (voter in 2024 FOMC) will likely be the last Fed official speaking (Jan 19) ahead of the Blackout period which starts from Sat (Jan 20) tillFeb 2. The Fed will release the latest Beige Book report (Jan 18).
Despite the up-tick in inflation, yields on 10-year US treasuries eased to below 4%. Technically, the yield on the 10-year US treasuries broke below the 200-day moving average in Dec 2023. The moving average has flattened from a previously rising trend and stands at 4.04%. The 10-year yield is currently at 3.97%. That the yield hasn’t moved much higher suggests that inflation may be under control. Support is at the end-Dec low of 3.78% for the time being.
The Straits Times Index meandered sideways for much of the week, ending at 3,191, up seven points week-on-week. Although the index is stuck below its 200-day moving average, currently at 3,201 at present, the 50- and 100-day moving averages, at 3,130 and 3,156 respectively, have turned up.
The break above 3,150 remains good, and the upside of 3,330 remais valid.
While the STI has underperformed the Nasdaq and S&P 500 in 2023, and over the past 10 years, it has done better than the Chinese equity market and the Hang Seng Index over both periods with these North Asian markets underperforming global markets by a large margin.
See also: STI’s upside from breakout remains valid as risk-free rates fade, but stay watchful for FOMC
