At the start of the North American session, the NZD is the strongest and the AUD the weakest.
Overnight, the Reserve Bank of New Zealand’s Monetary Policy Committee remained united in its belief that current restrictive monetary policy effectively dampens demand and eases capacity pressures, thereby supporting the return of inflation at target levels. The committee expects further reductions in capacity pressures, which should support the continued decline in inflation rates. However, despite a decline in business confidence and business expectations for future activity and investment, short-term pricing intentions, although reduced, remain high due to rising costs . Additionally, strong net migration continues to support consumer spending and housing costs, requiring interest rates to remain elevated over an extended period. The committee noted that the overall balance of risks has not changed significantly since its last meeting in February and stressed that there is limited flexibility to delay achieving the inflation target. They said current high inflation in services and continued high inflation in goods prices underline this urgency. At the same time, tight monetary policy amid weak global economic growth could accelerate the reduction in inflation more than expected. The comments are somewhat balanced, but the market interpreted them as being higher for longer, which helped support the NZD today.
US CPI will be the highlight today, but the Fed speech as well as the Fed minutes will also be in focus for traders. The US CPI will be released at 8:30 a.m. with expectations of a 0.3% gain for both the overall and core measures. The stock’s annual profit is expected to increase to 3.4% from 3.2% last month due to the decline in the 0.1% gain from a year ago according to calculations (replaced by 0.3 %).
Fedspeak scheduled Bowman, Barkin and Goolsbee:
- 8:45 a.m. ET: Federal Reserve Governor Michelle Bowman virtually participates in a discussion on “Basel capital requirements” ahead of the European Banks Executive Forum
- 12:45 p.m. ET: Federal Reserve Bank of Richmond President Thomas Barkin (virtually from Richmond) and Federal Reserve Bank of Chicago President Austan Goolsbee (virtually from Chicago) participate in the panel “Reimagining the full employment “
Finally, at 2 p.m. ET, the Federal Open Market Committee releases the minutes of its meeting on March 19-20, 2024. The Fed maintained the 3-down dot chart in 2024 at this meeting.
Also today, the Bank of Canada’s decision on interest rates will be announced. Adam has a great summary of the 6 things to watch out for in his article HERE.
A look at other markets at the start of the North American session currently shows:
- Crude oil is trading up $0.53 or 0.62% at $85.76. Yesterday at this time the price was $86.32
- Gold is trading down five dollars, or -0.21%, at $2,347.70. At this time yesterday, the price was $2,354.30.
- Silver is trading unchanged at $28.13. Yesterday at this time the price was $20.06
- Bitcoin is currently trading at $69,128. At this time yesterday, the price was trading at $70,896.
Pre-market, major indices trend higher ahead of key inflation data
- Dow Industrial Average futures imply a gain of 83.33 points. Yesterday, the index fell -9.13 points or -0.02% to 38883.68
- S&P futures imply a gain of. 10.34 points. Yesterday, the index rose 7.54 points or 0.14% to 5209.92
- Nasdaq futures imply a gain of 34.35 points. Yesterday, the index rose 52.68 points or 0.32% to 16306.64
The European indices are mostly higher:
- The German DAX was 0.78%
- CAC France, +0.60%
- British FTSE 100, + 0.75%
- Spanish ibex, +0.42%
- Italian FTSE MIB, +0.78% (10 minute delay)
Stocks in Asia-Pacific markets were mixed:
- Japanese Nikkei 225, -0.48%
- Chinese Shanghai Composite Index, -0.70%
- Hong Kong’s Hang Seng Index, +1.85%
- Australian S&P/ASX index, +0.31%
In the US debt market, yields are lower
- 2-year return 4.726%, -1.7 basis points. At this time yesterday, the yield was 4.762%
- 5-year yield 4.358%, -1.9 basis points. At this time yesterday, the yield was 4.393%
- 10-year yield 4.346%, -2.0 basis points. At this time yesterday, the yield was 4.381%
- 30-year yield 4.44%, -1.3 basis points yesterday at the same time the yield was at 4.5.7 percent
Looking at Treasury yield curve spreads:
- The 2-10 year gap stands at -38.2 basis points. As of this time Friday, the spread was -38.0 basis points.
- The 2-30 year spread stands at – -24.4 basis points. At this time Friday, the spread was -24.3 basis points.
European benchmark yields are lower:
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