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Headline Update, US Inflation, and Microsoft Get Purchase Approval

Israel's call for evacuations takes centre headlines, latest release of US inflation figures beat expectations, Microsoft receive approval for purchase of Activision Buzzard, and a day 5 update on the IMF Summit.

Headlines this morning are centring on Israel’s calls for the evacuation of over one million people from northern Gaza within 24 hours, as Israeli troops mobilise on Gaza’s border ahead of an expected ground offensive. Israel Defence Forces spokesperson, Jonathan Conricus, said in an online briefing that “the IDF calls for the evacuation of all civilians from Gaza City . . . from their homes, southwards, for their own safety and protection”. Spokesperson for the United Nations Secretary-General António Guterres, Stéphane Dujarric said that “the United Nations considers it impossible for such a movement to take place without devastating humanitarian consequences”. Dujarric continued by stating that “The United Nations strongly appeals for any such order, if confirmed, to be rescinded avoiding what could transform what is already a tragedy into a calamitous situation.”



This comes as the BBC are reporting that the death toll in Israel has reached 1,300 while more than 1,400 people have been killed in Gaza. At least 150 people have also been kidnapped by Hamas, with Israel maintaining that the blockage of the Gaza Strip (which has seen water, food and energy run dry) will continue until Hamas frees these hostages.

Today has seen the US Secretary of State, Antony Blinken arrive in Jordan following his visit to Israel. He is expected to meet with Jordan’s King Abdullah as well as Palestinian President Mahmoud Abbas in Amman. From there, Blinken is expected to travel onto Qatar as people from across international community meet for emergency talks.

More around the latest developments can be found at the BBC, click here to read.

US Inflation Beats Expectations

Yesterday afternoon, markets turned their attention to the latest release of US inflation figures. Headline CPI came in marginally higher-than-expected, with the month-on-month print for September coming in at 0.4% against expectations of 0.3%. The headline, year-on-year print for September also came in 10bps above expectation at 3.7%, signalling that the Fed still have their work cut out ahead of them and that another rate hike may be on the cards.

Meanwhile, core inflation – which excludes the more volatile food and energy indexes – came in line with expectations, with the annualised figure for September slowing to 4.1%, its lowest level since September. This also represented a slowdown of 20bps from last month’s print, as inflation around transportation, new vehicles and clothing eased. Nevertheless, as the America’s housing market continues to adjust to tighter monetary conditions, the Shelter Index hit 7.2%, which while representing a 10bps slowdown from last month remains elevated. As the Bureau of Labor Statistics notes “The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase”.

The hotter-than-expected inflation print saw a rally to the dollar as markets upwardly revised rate expectations from the Fed. As such, the DXY rallied 0.8% over the course of yesterday’s session, hitting 106.6, marking its highest level in a week.

All eyes now turn to the Fed’s rate decision on 1 November in addition to Chair Powell who is speaking at Economic Club of New York on 19 October.  As we looked at yesterday, the release of the Fed Minutes noted that all members of the FOMC agreed that monetary conditions ought to be restrictive enough for some time to ensure that inflation gets down to their 2% target level. As usual, the minutes indicated that policy maker’s views would be data dependent, and the document indicated that “a vast majority of participants continued to judge the future path of the economy as highly uncertain”.

CMA Give the Green Light for Microsoft’s Acquisition of Activision Blizzard

The Competition Markets Authority have given the go ahead for Microsoft’s to buy video games giant, Activision Blizzard. This marks the largest deal to date in the gaming world and comes after the CMA previously blocked Microsoft’s bid in April 2022, citing concerns around the impact that it would have on competition in the cloud gaming market. Since then, changes to the deal have been made and the French game giant Ubisoft, agreed to acquire Activision Blizzard’s cloud gaming rights, rather than Microsoft. Regulators in Europe and the US had previously given the green light, so the UK regulator marked the final hurdle for Microsoft (who owns Xbox) to acquire the company which produce games such as Call of Duty and Tony Hawk Pro Skater.

Despite the CMA giving the go-ahead, they have expressed discomfort at they way Microsoft have engaged with them. Here, the CMA’s chief executive, Sarah Cardell, maintained that “Tactics employed by Microsoft are no way to engage with the CMA”. They continued by stating that “with the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market”.

Lagarde To Speak at IMF Summit

Today will see central bankers, finance ministers, executives and academics from around the world meet for day 5 of the IMF’s meeting in Marrakesh. As we looked at yesterday, the summit made headlines with the release of the IMF’s World Economic Outlook report, published on Tuesday which downwardly revised global growth forecasts. The report also projected that UK growth would be the weakest amongst G7 over 2024. Today’s highlights will include Christine Lagarde who will speak at 1400, where markets will be looking for some insight into her views on the ECB’s next moves as economies around the Eurozone adjust to tighter monetary conditions.

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