Morning Suggestion: Nervous inflation won’t abate | – #Morning #Suggestion #Nervous #inflation #wont #abate
From Mike Dolan USA and an outlook on the day ahead in global markets
As investors consider what appears to be a re-acceleration of the global economy in the new year, steady inflation rumors about fell and interest markets still prices tries to change again.
on friday USAof the latest inflation The surprise was the same in Europe on Tuesday, France and the title of Spain inflation rates unexpectedly rose again in February – an unsettling final day of a transformative month for markets.
A dramatic revision of the macro and inflation picture since early February, with both the Federal Reserve and Europe It showed peak policy rates for the Central Bank rising by half a percentage point since the start of the month to 5.4% and 3.9% respectively.
This is slightly higher than the current levels of 4.50-4.75% and 2.5%. Equally important, any thoughts of rate cuts have evaporated this year.
And worryingly, market-based measures of inflation expectations are also rising sharply again.
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Derived from inflation-protected Treasury securities USA’s two-year “breakthrough” inflation rates rose 80 basis points to 2.8% this month – dispelling earlier speculation that inflation would return to the Fed’s 2% target within two years.
10 The Fed’s target remains elusive, though annual “yields” have held steady at just under 2.5%. In Europe, the five-year, five-year forward inflation-linked swap rose 20bps to a nine-month high of just under 2.5%.
Central bank the message from its leaders is that rates should rise further and not fall rapidly.
ECB chief economist Philip Lane told Reuters on Tuesday that inflationary pressures in the euro zone were showing some signs of easing, but there would be no end to interest rate hikes until the ECB had more confidence in its target.
Asked how long rates could stay in an area that has limited economic growth, Lane said: “It could be a fairly long period, a fair number of quarters.”
Stock markets steadied after early losses, with US futures open and slightly red ahead of the month-end.
Dollar was also mixed, rising against the yen but falling back against the yuan and sterling. Pound Britain and European Union continued its progress in this week’s progress in Brexit negotiations between
Russia troops of Ukraine attempt to besiege the city of Bakhmut in the east and the investors of China to Moscow military backed off amid geopolitical tensions amid concerns it could provide support — a move US government officials said would be costly for Beijing.
Concerns about Taiwan were also in focus in the markets.
China says the U.S. is abusing state power to crack down on foreign companies after the White House gave government agencies 30 days to remove the Chinese app TikTok from federal devices. national overextends the concept of security.
In company news, staffing firm Adecco said hiring activity weakened modestly after reporting weaker-than-expected earnings in early 2023.
British asset manager abrdn posted a full-year pre-tax loss and a drop in client funds for 2022 as turmoil in global markets and runaway inflation weighed on its finances.
Key developments that could guide US markets on Tuesday:
* US February consumer confidence, Chicago PMI business survey, Richmond Fed business survey, February Dallas Fed service sector survey, US wholesale, retail inventory, goods trade balance, US December home prices
* Chicago Federal Reserve President Austin Goolsby speaks; Bank of England chief economist Huw Pill and BoE policymaker Catherine Mann speak
* President of Belarus Alexander Lukashenko He will meet with Chinese President Xi Jinping in Beijing
* US corporation earnings: AutoZone, Agilent, HP, First Solar, AMC Entertainment, Monster Beverage, Sempra Energy, etc.
Capital goodsReuters GraphicsReuters GraphicsReuters GraphicsReuters GraphicsBy Mike Dolan, edited by XXXX [email protected]. Twitter: @reutersMikeD
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2023-02-28 15:14:55
Source – reuters
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