Headlines:
- UK February CPI +10.4% vs +9.9% y/y expected
- Hot UK inflation data adds to headache for BOE
- Cable at seven-week highs ahead of the BOE tomorrow
- ECB's Lagarde: We are neither committed to raise further nor are we finished on rate hikes
- ECB's Lane: There are reasons to believe underlying inflation measures will ease over time
- ECB's Nagel backs further rate hikes, plays down banking turmoil
- Eurozone January current account balance €17.0 billion vs €15.9 billion prior
- OPEC+ reportedly likely to stick to existing deal until the end of the year
- UK March CBI trends total orders -20 vs -15 expected
- US MBA mortgage applications w.e. 17 March +3.0% vs +6.5% prior
Markets:
- GBP leads, JPY lags on the day
- European equities slightly higher; S&P 500 futures flat
- US 10-year yields up 1.5 bps to 3.62%
- Gold up 0.1% to $1,941.83
- WTI crude down 0.3% to $69.45
- Bitcoin up 0.2% to $28,190
It's all about the Fed today and broader market sentiment is more pensive in general, though the overall mood is steady.
That comes after the risk recovery in the past two days but now markets will have to pass the Fed test to see what comes next. The banking turmoil may have subsided but the Fed could very well reignite some fears and anxiety again later before all is said and done.
As such, equities didn't do a whole lot with bond yields also considerably little changed after a volatile last two weeks.
Instead, it was the pound who stole the focus as UK inflation surprisingly runs hot in February as food prices jump by the highest since 1977. Headline annual inflation moved back into double-digits and core inflation shot above 6%, and that helped to underpin the pound in European morning trade.
Coming into today, markets were just expecting one more rate hike by the BOE this week before heading to the sidelines. But after the data, another 25 bps is now priced in for May and that is now the peak for rates based on the OIS market.
GBP/USD moved up from 1.2230 to near 1.2300 before backing off slightly, sitting around 1.2260-80 mostly now.
Elsewhere, the dollar is just a touch lower against the euro and the antipodeans though the ranges for the day are leaving a lot to be desired. EUR/USD entered into the session sitting around 1.0770 but is now seen pushing towards 1.0800.
Now, on to the Fed next.
