- US February core CPI 3.8% y/y versus 3.7% y/y expected
- BOEs Bailey: Question of policy restrictiveness is now key
- US EIA now sees stronger oil production growth in 2024
- US treasury sells $39 billion of 10 year note at a high yield of 4.166%
- ECBs Buch: Underlining vulnerabilities may not have been exposed
- Putin says he supports OPEC+ production curbs but notes argument about market share
- OPEC sticks to forecast for strong demand growth this year
- US February federal budget deficit -296.0B vs -299.0B expected
Markets:
- S&P 500 up 1.1%
- WTI crude oil down $0.12 to $77.81
- Gold down $28 to $2154
- US 10-year yields up 5.3 bps to 4.156%
- USD leads, JPY lags
The main event of the week rolled in on Tuesday and it certainly grabbed the market's attention but the price action wasn't kind. The numbers were modestly on the hot side -- even factoring in all the usual caveats -- and the initial market reaction was what you would expect. The US dollar rose 40-60 pips across the board.
However moments later the move began to reverse and then completely turned around and more.
That wasn't the end of the story though as eyes stayed on CPI, it was clearly hotter and US Treasuries confirmed that with 2-year yields up 6 bps and Fed pricing down to 83 bps this year from 89 pre-data. The dollar began to tick higher again and eventually retested the CPI highs.
It couldn't break them though and equities caught a strong bid. The market found it difficult to ignore the AI enthusiasm and the US dollar began to drift lower, again erasing most of the CPI move (but not all).
On net, the result is that most pairs are on track to finish little changed on the day, which is something of a win for the dollar bears. The exception is USD/JPY as the market continues to try and sort out the BOJ. That pair briefly rose above 148.00 before settling into the 147.60 range.
