As the North American session begins, the NZD is the strongest and the AUD is the weakest.
Overnight, the Reserve Bank of New Zealand's monetary policy committee remained united in their belief that the current restrictive monetary policy is effectively curbing demand and easing capacity pressures, aiding the return of inflation to the target levels. The committee anticipates further reductions in capacity pressures which should support the continued decline in inflation rates. However, despite a decline in business confidence and firms' expectations for future activity and investment, near-term business pricing intentions, although reduced, are still high due to increased costs. Furthermore, strong net migration continues to bolster consumer spending and housing costs, necessitating the maintenance of high-interest rates over an extended period. The committee noted that the overall risk balance has not significantly changed since their last meeting in February and emphasized that there is limited flexibility to delay achieving the inflation target. They cited that the ongoing high services inflation and still elevated goods price inflation underscore this urgency. At the same time, the stringent monetary policy amidst weak global economic growth might hasten the reduction in inflation more than previously anticipated. The comments are somewhat balanced, but the market interpreted them as higher for longer and that helped to support the NZD today.
The US CPI will be the highlight today, but the Fedspeak along with Fed minutes will also be a focus for traders. The US CPI will be released at 8:30 AM with the expectations of a gain of 0.3% for both the headline and the core measure. The YoY for the headline is expected to rise to 3.4% from 3.2% last month due to the dropping of a 0.1% gain one year ago from the calculations (replaced by 0.3%).
The Fedspeak has Bowman, Barkin and Goolsbee scheduled:
- 8:45 AM ET: Federal Reserve Board Governor Michelle Bowman participates virtually in discussion on "Basel Capital Requirements" before the European Bank Executive Forum
- 12:45 PM ET: Federal Reserve Bank of Richmond President Thomas Barkin (virtually, from Richmond) and Federal Reserve Bank of Chicago President Austan Goolsbee (virtually, from Chicago) participate in "Reimagining Full Employment" panel
Finally at 2:00 PM ET, the Federal Open Market Committee issues minutes from its meeting of March 19-20, 2024. The Fed kept the dot plot at 3 cuts in 2024 at that meeting.
Also today will be the Bank of Canada interest rate decision. Adam has a great summary of the 6-things to watch for in his post HERE.
A snapshot of the other markets as the North American session begins currently shows:
- Crude oil is trading up $0.53 or 0.62% at $85.76. At this time yesterday, the price was at $86.32
- Gold is trading down five dollars or -0.21% at $2347.70. At this time yesterday, the price was $2354.30
- Silver is trading unchanged at $28.13. At this time yesterday, the price was at $20.06
- Bitcoin currently trades at $69,128. At this time yesterday, the price was trading at $70,896
In the premarket, the major indices are tilting to the upside before the key inflation data
- Dow Industrial Average futures are implying a gain of 83.33 points. Yesterday, the index fell -9.13 points or -0.02% at 38883.68
- S&P futures are implying a gain of. 10.34 points. Yesterday, the index rose 7.54 points or 0.14% at 5209.92
- Nasdaq futures are implying a gain of 34.35 points. Yesterday, the index rose 52.68 points or 0.32% at 16306.64
The European indices are mostly higher:
- German DAX, was 0.78%
- France CAC , +0.60%
- UK FTSE 100, + 0.75%
- Spain's Ibex, +0.42%
- Italy's FTSE MIB, +0.78% (delayed 10 minutes)
Shares in the Asian Pacific markets were mixed:
- Japan's Nikkei 225, -0.48%
- China's Shanghai Composite Index, -0.70%
- Hong Kong's Hang Seng index, +1.85%
- Australia S&P/ASX index, +0.31%
Looking at the US debt market, yields are lower
- 2-year yield 4.726%, -1.7 basis points. At this time yesterday, the yield was at 4.762%
- 5-year yield 4.358%, -1.9 basis points. At this time yesterday, the yield was at 4.393%
- 10-year yield 4.346%, -2.0 basis points. At this time yesterday, the yield was at 4.381%
- 30-year yield 4.44%, -1.3 basis points at this time yesterday, the yield was at 4.5.7 percent
Looking at the treasury yield curve spreads:
- The 2-10 year spread is at -38.2 basis points. At this time Friday, the spread was at -38.0 basis points
- The 2-30 year spread is at - -24.4 basis points. At this time Friday, the spread was at -24.3 basis points
European benchmark yields are lower:
