Financial Markets Daily Report11 April 2024
Concerns about a hotter-than-expected inflation in the US centered the stage in yesterday’s session. In March, headline CPI rose by 3.5% y/y (3.2% in the previous month) and the core index rose by 3.8%, the same rate as in February.
- Concerns about a hotter-than-expected inflation in the US centered the stage in yesterday’s session. In March, headline CPI rose by 3.5% y/y (3.2% in the previous month) and the core index rose by 3.8%, the same rate as in February.
- Following the release, investors revised markedly their expectations for the Fed's interest rate path ahead. The probability of seeing the first rate cut in June declined from 60% on Tuesday to 20% and rates are expected to be at the 4.75%-5.00% range by-year end (4.50%-4.75% previously).
- In this context, sovereign yields rose markedly and equities edged down in the US. In FX markets, the US dollar strengthened against most peers and the euro fluctuated below $1.08.
- Today the focus will be on the ECB monetary policy meeting, where interest rates are expected to remain unchanged but communication might signal an interest rate cut at the next meeting (June 6th).