Markets are off their highs as tension mounts towards the release of US inflation figures, which may show a significant increase. Weak Chinese data, the global chip shortage, and covid are all weighing on sentiment. XRP stands out among cryptocurrencies.
The US dollar is edging up alongside bond yields, despite a relatively benign ten-year bond auction on Monday. EUR/USD is trading below 1.19, GBP/USD under 1.3750, and USD/JPY just shy of 110. A 30-year auction may move returns on bonds, but investors are eyeing another development.
Gold has come under extended pressure amid rising yields, trading below $1,730. falling to the lowest in a week.
US Consumer Price Index figures for March are in the spotlight. A significant year-over-year bump is expected due to the sharp drop recorded in March 2020. However, after producer prices surprised with a large monthly leap, investors are also eyeing an even higher increase, especially in headline CPI, which carries expectations of a 0.5% rise. Core CPI is set to rise by 0.2%.
The Federal Reserve has been dismissing inflation concerns and wants to see sustained price rises before raising interest rates. James Bullard, President of the St. Louis branch of the Fed, said that he wants to recenter inflation expectations around 2%. His colleague from Atlanta, Raphael Bostic, is set to speak later in the day.
The White House has pledged around $50 billion for semiconductor manufacturing amid a global chip shortage. Supply strains are worrying investors.
Coronavirus cases continue rising in Europe, Brazil, and India, prompting the World Health Organization to plead for further restrictions and not reopenings. Germany is set to extend its lockdown amid a political crisis. Chancellor Angela Merkel’s CDU/CSU is split over selecting a candidate for September’s general elections.
Britain: UK Gross Domestic Product missed estimates with 0.4% in February, below 0.5% projected. On the other hand, the nation is progressing toward vaccinating the under 50s, extending its immunization campaign.
Cryptocurrencies: Ripple’s XRP stands out by jumping above $1.50. Ethereum is also moving higher, hovering around $2,200. Bitcoin is changing hands around $60,000.
China reported an annual increase of 30.6% in its exports in March, below expectations. The data is skewed by the substantial drop-off in March last year.