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- Yesterday’s key release of US CPI (inflation) data showed annualized inflation fell month on month from 6.4% to 6.0%, exactly as forecasted by most analysts. This took pressure off the Federal Reserve, who are contending with a banking crisis caused by the failure of two large US banks, Silicon Valley Bank and Signature Bank. The markets will likely now be more forgiving if the Fed either makes no rate hike at its next meeting on 22nd March or hikes by only 0.25%.
- The US inflation news stopped the recent decline in the US Dollar and triggered a recovery in stock markets and in short-term US treasury yields – the recovery in yields was firmer. The S&P 500 Index closed higher yesterday by 1.65%.
- Despite the broader recovery in US stock markets, banking stocks have continued to suffer steep declines as a sector. Charles Schwab is rumoured to be in trouble. Its stock price has declined by more than 20% in the last 3 days.
- The price of Bitcoin hit a 9-month high yesterday above $26,500 but has made a considerable bearish retracement since then. The cryptocurrency will not look bullish again until it can get re-established above the key psychological level of $25k.
- In the Forex market, the US Dollar has stabilised, with the Euro and the Australian Dollar today looking strong while the New Zealand Dollar looks weak.
- UK claimant count change data released yesterday showed a minor increase in UK unemployment last month.
- Today will see the release of a slew of US economic data – PPI, Retail Sales, and the Empire State Manufacturing Index. The former two will be closely watched.
- The UK government will release its annual budget today, so we may see some volatility in the British Pound.