The AUD is the strongest and the GBP is the weakest as the NA session begins.
Helping to weaken the GBP, the UK inflation data was slightly below expectations, indicating a stabilization in price pressures. Specifically, the Consumer Price Index (CPI) year-on-year remained stable at 4.0%, matching the previous value and slightly below the forecast of 4.1%. Core CPI, which excludes volatile food and energy prices, also remained steady at 5.1%, slightly below the anticipated 5.2%. Producer Price Index (PPI) Input month-on-month showed a larger than expected decrease, recording -0.8% against a forecasted increase of 0.1%. PPI Output month-on-month aligned with expectations at -0.2%, showing a modest improvement from the previous -0.5%. Retail Price Index (RPI) year-on-year came in at 4.9%, lower than both the forecast and previous value of 5.1% and 5.2%, respectively. These figures suggest a slight easing in inflationary pressures, particularly in producer prices, while consumer prices remain relatively stable.
After the data, the likelihood of a rate cut by June has increased to approximately 71%, a notable rise from the roughly 40% chance before the UK CPI data was released. As per Justin's post HERE, despite this increase, there remains a degree of uncertainty regarding the central bank's actions by the end of the first half of 2024. The recent data showed a slight decrease in goods inflation from 1.9% to 1.8% monthly, but services inflation, which is of particular concern to the Bank of England (BOE), edged up from 6.4% to 6.5% in January. This mixed inflation scenario adds complexity to the BOE's decision-making process regarding interest rates.
In Europe, the the flash employment and GDP releases came in as expected. Industrial production was much stronger than expectations at 2.6% vs -0.2% estimate.
US stocks are higher in pre-market trading after declining yesterday on the back of the higher-than-expected CPI inflation numbers. Nvidia which closed only marginally lower yesterday (-0.17%), is back at it with a gain of 1.54%. Super Micro Computers which ROSE 2.39% yesterday, is up 3.37% as it continues its squeeze to the upside. Microsoft is up around 1%, Alphabet is up 0.86%, Amazon is up 1.07% and Apple shares are up 0.36%.
Yields in the US are marginally lower after the surge higher saw the 10-year move up to test its 100-day MA at 4.327. A move above that MA would open the door for more upside potential. Staying below may signal a short-term(?) peak (or at least stall the move higher).
Looking at some of the key earnings released today.
- Kraft Heinz Co KHC Q4 2023 USD: Adj. EPS $0.78 vs. Exp. $0.77 (BEAT), Revenue $6.86bn vs. Exp. $6.98bn (MISSED), Adj. EBITDA $1.65bn vs. Exp. $1.69bn (MISSED).
- CME Group Inc CME Q4 2023 USD: Adj. EPS $2.37 vs. Exp. $2.28 (BEAT), Revenue $1.44bn vs. Exp. $1.43bn (BEAT), Clearing and transaction fees $1.18bn vs. Exp. $1.17bn (BEAT).
- Global Payments Inc GPN Q4 2023 USD: Adj. EPS $2.65 vs. Exp. $2.64 (BEAT), Revenue $2.43bn vs. Exp. $2.18bn (BEAT).
- Martin Marietta Materials Inc MLM Q4 2023 USD: EPS $4.63 vs. Exp. $3.99 (BEAT), Revenue $1.608bn vs. Exp. $1.63bn (MISSED).
- Barrick Gold Corp GOLD Q4 2023 USD: EPS $0.27 vs. Exp. $0.21 (BEAT), Revenue $3.06bn vs. Exp. $3.15bn (MISSED).
A snapshot of the markets as the North American session begins currently shows:
- Crude oil is trading up $0.10 or 0.13% at $77.98. At this time yesterday, the price was trading at $77.52
- Gold is trading down $1.63 or -0.08% at $1991.24. At this time yesterday, the price was trading at $2027.64
- Silver is trading eight cents for -0.3% at $22.02. At this time yesterday, the price was trading at $22.83
- Bitcoin trades at $51,556. At this time yesterday, the price was trading at $49,911.
In the premarket for US stocks, the major indices are all trading higher once again after the one-day decline due to the higher-than-expected CPI data yesterday.
- Dow Industrial Average futures are implying a gain of 88.25 points. Yesterday, the index fell -524.63 points or -1.35% at 38272.76
- S&P futures are implying a gain of 23.83 points. Yesterday, the index fell -68.67 points or -1.37% at 4953.16
- Nasdaq futures are implying a gain of 119.83 points. Yesterday, the index fell -286.95 points or -1.80% at 15655.60
In the European equity markets, the major indices are trading higher:
- German DAX, +0.34%
- France CAC +0.59%
- UK FTSE 100, +0.91%
- Spain's Ibex, +0.57%
- Italy's FTSE MIB, +0.58% (delayed by 10 minutes).
Shares in the Asian Pacific markets were mixed
- Japan's Nikkei 225, -0.69%
- China's Shanghai composite index , Bank holiday market closed
- Hong Kong's Hang Seng index, +0.84%
- Australia S&P/ASX, -0.74%
Looking at the US debt market, yields are lower after surging yesterday on the stronger-than-expected CPI data.
- 2-year yield 4.64% -3.2 basis points. At this time yesterday ahead of the CPI data, the yield was at 4.472%
- 5-year yield 4.291% -2.7 basis points. At this time yesterday ahead of the CPI data, the yield was at 4.128%
- 10-year yield 4.300% -1.6 basis points. At this time yesterday ahead of the CPI data, the yield was at 4.165%
- 30-year yield 4.460% -0.6 basis points. At this time yesterday ahead of the CPI data, the yield was at 4.359%
- The 2-10 year spread is at -32.1 basis points. At this time yesterday, the spread was at - 31.0 basis points
- The 2-30 year spread is at -16.4 basis points. At this time yesterday, the spread was at -11.3 basis points.
In the European debt market, the benchmark 10-year yields are mixed:
