The quarter ends, but the inflation headache continues | MarketTalk: What’s up today? | Swissquote

Show notes

March preliminary inflation figures from the Eurozone confirmed that headline inflation in Europe eased by a big chunk in March, thanks to the base effect - as we know compare war months to war months, but core inflation looks sticky, giving support to the European Central Bank (ECB) hawks and the euro bulls.
In the US, the US dollar is sitting at the low levels of the Silicon Valley Bank (SVB) collapse, and despite hawkish comments from Federal Reserve (Fed) officials – hinting at further rate hikes to tame inflation – the banking stress and soft economic data prevent the hawkish Fed pricing from taking effect.
Released yesterday, the US GDP data showed that the US economy grew 2.6% in Q4, slightly less than the 2.7% penciled in by analysts. Yet, the GDI – the gross domestic income – fell 1.1% during the same time, from 2.8% printed in Q3. That was the largest decline since the pandemic.
Moreover, the US corporate profits fell 2% in Q4 – the most in the past two years – and the profit margins fell from around 15% to 14%.
As a result of soft economic data, the US 2-year yield stagnates a touch above the 4% mark – rejecting the further rate hike comments.
Soft yields continue giving support to stock indices despite warnings from the economic data front. The S&P500 will be closing the month with gains and Nasdaq 100 will step into the new quarter having stepped into the bull market.
Today, the US will release the February PCE data – the Fed’s favourite gauge of inflation. Core inflation may have eased on a monthly basis, but is expected to remain steady on a yearly basis around the 4.7% mark. A read in line with expectations, or ideally lower than expected could keep the Fed hawks at bay, and let the dollar further relax.
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