Stocks Edge 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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The S&P 500 contracts higher in a narrow range along with European stocks as investors are sidelined ahead of a report that could spark fresh volatility. Two-year Treasury yields rose above 4%, while the dollar was broadly lower.

US core inflation is expected to ease, with key forecasts easing on a monthly and annual basis, supporting market expectations that the central bank will deliver one more rate hike before pausing and returning to easy policy in the second half of the year. .

It’s a delicate balancing act for central bank officials juggling the need to control hyperinflation and stabilize ailing banks.

“Markets have recently taken the view that the central bank needs to ensure stability in the financial system, meaning easing rate hikes that could topple the economy,” said Russ Mold, investment director at AJ Bell. The update is even more important for the central bank.”

The message from central bank officials has been mixed. Chicago Fed President Austin Goolsbee on Tuesday argued the central bank should exercise “prudence and patience,” while New York Fed President John Williams said officials have more work to do to tackle inflation.

Swap contracts are priced at three-in-four odds of another quarter-point Fed hike next month. Traders forecast US rates to peak at 5%, with policymakers cutting at least 50 basis points by the end of the year.

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Also Read: US Preview: Soft March CPI Print To Fuel Fed Rate-Cut Race

The dollar weakened against its group of 10, while the euro advanced for a second day. The yen and the British pound were the only major currencies to fall against the greenback, which extended its slide for a fifth straight day.

Elsewhere, bitcoin fell below $30,000 after rising above that level for the first time in 10 months on Tuesday. Oil was flat as traders tracked supply constraints and gold rose.

Highlights of this week:

  • Canada rate decision, Wednesday

  • US FOMC Minutes, CPI, Wednesday

  • Richmond Fed’s Thomas Parkin speaks Wednesday

  • China Trade, Thursday

  • US PPI, Initial Jobless Claims, Thursday

  • US Retail Sales, Merchandise Inventory, Industrial Production, University of Michigan Consumer Sentiment, Friday

  • Major US banks JP Morgan Chase, Wells Fargo and Citigroup report earnings on Friday

Some key movements in the markets:

Shares

  • S&P 500 futures were up 0.1% at 5:42 a.m. New York time

  • Nasdaq 100 futures were little changed

  • Futures for the Dow Jones industrial average rose 0.2%

  • The Stoxx Europe 600 rose 0.3%

  • The MSCI World Index was little changed

Coins

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was up 0.1% at $1.0924

  • The British pound was little changed at $1.2416

  • The Japanese yen was little changed at 133.77 per dollar

Cryptocurrencies

  • Bitcoin was down 0.6% at $30,013.65

  • Ether fell 1.3% to $1,869.92

Bonds

  • The yield on 10-year Treasuries edged up a basis point to 3.44%

  • Germany’s 10-year yield rose two basis points to 2.33%

  • Britain’s 10-year yield was little changed at 3.54%

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materials

  • West Texas Intermediate crude was up 0.3% at $81.74 a barrel.

  • Gold futures rose 0.3% to $2,024.70 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Tasia Sibahuder.

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