Shares rise in holding pattern before inflation: Markets Wrap
(Bloomberg) — Global stock trading was muted as investors awaited U.S. inflation data that could shed light on the Federal Reserve’s next policy move.
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S&P 500 contracts ticked higher with European shares in a narrow range as investors stayed on the sidelines ahead of the report that could create fresh volatility. Two-year Treasury yields climbed further above 4%, while the dollar was broadly lower.
US headline inflation is expected to moderate, with the core reading forecast to ease on both a monthly and annual basis, supporting market expectations that the Fed will deliver another rate hike before a pause and swing to easier policy in the second half of the year.
For Fed officials juggling the need to curb rampant inflation and stabilize faltering banks, it̵[ads1]7;s a delicate balancing act.
“The markets have recently taken the view that the Fed needs to ensure stability in the financial system. That means easing interest rate hikes that could overturn the economy,” says Russ Mould, chief investment officer at AJ Bell. “But the reason interest rates have risen so quickly in the last 12 months down to rising inflation, so today’s update will still matter for the Fed.”
Messages from Fed officials themselves have been mixed. On Tuesday, Chicago Fed President Austan Goolsbee argued the central bank should exercise “caution and patience,” while New York Fed President John Williams said officials have more work to do to tackle inflation.
Swaps are pricing in roughly three-in-four odds of another quarter-point Fed hike next month. Traders are predicting that US interest rates will top out at around 5%, and policymakers will then cut by at least 50 basis points by the end of the year.
Read more: US PREVIEW: Soft March CPI Print to Fuel Fed Rate-Cut Bets
The dollar weakened against most of its Group-of-10 peers, while the euro rose for a second day. The yen and the British pound were the only major currencies to fall against the dollar, extending the fall to a fifth day.
Elsewhere, Bitcoin fell back below $30,000 after rising above that level on Tuesday for the first time in 10 months. Oil steadied as traders heeded supply constraints and gold rallied.
Important events this week:
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Canada’s interest rate decision, Wednesday
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US FOMC minutes, CPI, Wednesday
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Richmond Fed’s Thomas Barkin speaks on Wednesday
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China trade, Thursday
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US PPI, first jobless claims, Thursday
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US retail trade, business inventories, industrial production, consumer sentiment at the University of Michigan, Friday
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The major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings on Friday
Some of the main features of markets:
Stock
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S&P 500 futures rose 0.1% as of 5:42 a.m. New York time
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Nasdaq 100 futures were little changed
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Dow Jones Industrial Average futures rose 0.2%
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Stoxx Europe 600 rose 0.3%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.1% to $1.0924
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The British pound was little changed at $1.2416
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The Japanese yen was little changed at 133.77 per dollar
Cryptocurrencies
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Bitcoin fell 0.6% to $30,013.65
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Ether fell 1.3% to $1,869.92
Bonds
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The yield on 10-year government bonds rose one basis point to 3.44%
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Germany’s 10-year yield rose two basis points to 2.33%
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UK 10-year yields were little changed at 3.54%
Raw materials
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West Texas Intermediate crude rose 0.3% to $81.74 a barrel
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Gold futures rose 0.3% to $2,024.70 an ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Tassia Sipahutar.
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