- US March PCE core inflation 4.6% vs 4.5% expected
- Canada GDP for February 0.1% versus 0.2% estimate
- US employment cost index for Q1 +1.2% q/q vs +1.1% expected
- April final UMich consumer sentiment 63.5 vs 63.5 expected
- Dallas Fed trimmed mean PCE price index +3.4% annualized in March
- Germany April preliminary CPI +7.2% vs +7.3% y/y expected
- Atlanta Fed GDPNow initial estimate for Q2 growth at 1.7%
- First Republic: "The window is closing fast" - report
- Shares of First Republic fall more than 40% as receivership looms
- Baker Hughes US oil rig count unchanged at 591
Markets:
- Gold up $1 to $1989
- WTI crude oil up $1.95 to $76.71
- US 10-year yields down 9 bps to 3.43%
- S&P 500 up 0.9%
- GBP leads, JPY lags
The big story of the day was the Bank of Japan leaving policy unchanged and the yen taking a beating. It tumbled right across the board but arguably the biggest move in a technical sense was in EUR/JPY as the pair broke above the 2014 high and the 150.00 level, both for the first time since 2008.
Other yen crosses also made big moves and that could signal a fresh round of divergence. The BOJ staying easy also helped to put a bid in bonds.
The PCE headlines were hawkish but my sense is that the market sniffed it out based on the details in the GDP report. It was also another reminder that the market has moved past inflation worries and is more concerned the Fed is going to snuff out growth. The PCE inflation numbers appear certain to fall below 4% in short order and that could come as soon as next month.
Banking worries continue to percolate but they're isolated around First Republic with the regional bank ETF up 1.7% on the day.
Cable was strong starting in North American trade in a move that foreshadowed the positive sentiment in equities that later appeared. Perhaps that was a coincidence and due to month-end flows but it was a strong move for the pound, perhaps with the lift of GBP/JPY bids.
One of the biggest intraday turns was in USD/CAD as the pair mirrored a reversal in oil and sentiment. USD/CAD rose as high as 1.3667 before sinking to 1.3550 late.
Have a great weekend.
