With 10-year Treasury yields pushing above 4%, it is weighing on equities sentiment and the dollar is also running higher to start the day. It is shaping up to be a case that markets are coming around to the idea that inflation may be more sticky and central banks will have to be more aggressive in the months ahead.
There are already some big calls with Goldman Sachs expecting another 50 bps rate hike by the ECB in May and Nomura revising its call for the Fed for a 50 bps move in March. That arguably underlines the risks heading into the key central bank policy decisions later this month.
Eurozone inflation will add to the mix later today and after the higher readings seen during the week in France, Spain, and Germany, we should see headline annual inflation beat estimates of 8.2%. Do keep an eye out on the core reading (estimate 5.3%) though as that will factor into consideration for ECB rates pricing.
Despite the understandable impact, we could still see the bond market run with it as yields are at fresh cycle highs in Europe.
1000 GMT - Eurozone February preliminary CPI figures
1000 GMT - Eurozone January unemployment rate
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
