cpi rate

There is no sign of inflation slowing down, there are still major issues with the supply chains, money supply is still rising and the war in the Ukraine affecting investor sentiment are all aspects driving the rise in inflation worldwide. UK Inflation: The increase has deepened the cost of living crisis in the UK The UKs inflation hit an all time 30 year high in March and the April reading is expected to further increase. As a result over the last month, investments in REITs have increased, as investors are looking to REITs as a potential hedge against inflation, REITs are also a useful tool to diversify an investment portfolio. The graph shows one of the top REITs (Residential Secure Income Plc ) in the UK and its performance over the past week amidst the announcements of housing inflation increasing. Related article: ECB To Shock Markets In The Following Week!? US Dollar Rate Under Pressure As Well! Price Chart of Residential Secure Income Plc

US small business optimism held steady in April after three consecutive falls. Nonetheless, businesses retain the ability to pass higher costs onto their customers and this will keep inflation sticky. Ongoing supply chain issues and rising fuel costs mean 2% inflation is a distant prospect Business sentiment holds steady, but firms still want to hire The recent US data has been mixed and that has helped to fuel fears that the economy could experience a marked slowdown, especially with the Federal Reserve firmly focused on inflation and hiking interest rates. Dollar strength is acting as a further headwind to growth by making US exports less price competitive in what is already a challenging external demand environment for companies. In this regard this morning’s National Federation of Independent Business survey for April was marginally better than expected at the headline level with optimism holding steady versus expectations of a fourth consecutive monthly drop. Nonetheless it is still the weakest level since April 2020 in the immediate aftermath of the pandemic striking. The details show a slight improvement in the proportion of small businesses expecting higher sales, but there was a little more pessimism on the outlook for the economy and whether it was a good time to expand. Set against this softer environment, firms are still struggling with worker shortages and are desperate to hire. The NFIB released the labour components last Thursday, which a net 46% having raised worker compensation during the past 3 months and 27% expecting to do so further. Inflation pressures show no sign of moderating Looking to tomorrow's inflation data the NFIB report shows a net 70% of companies raised their selling prices in the past 3 month - down from last month's 72% balance, but this is still the second highest reading in the survey's 47-year history. Moreover, a net 46% of firms plan to raise their prices further over the next three months (down from 50%, but this is still the 6th highest reading in the survey's history). This reinforces the message the despite concerns about where the economy is heading, businesses continue to have pricing power and highlights the breadth of inflation pressures in the economy. The ability to raise prices is seen across all sectors and all sizes of businesses NFIB price indicators show no sign of a turn in inflation Source: Macrobond, ING Inflation may be peaking, but 2% is a long way away Tomorrow's CPI report will probably show that inflation has passed the peak, due largely to lower used car prices, but in the absence of major improvements in supply chains and geopolitical tensions, the descent to the 2% target will be very slow and may not be achieved until the very end of 2023. However, with national gasoline prices hitting a new all-time high yesterday that will come as little comfort to most households. TagsUS Inflation Federal Reserve Business optimism   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

All quiet in Asia ahead of US inflation In this article Macro outlook What to look out for: China and US inflation Source: shutterstock Macro outlook Global: The big story today is going to be the April US CPI release, and markets may be quite muted ahead of this. Our Chief US Economist has written about this in the context of the latest NFIB business survey, so please check out this link for more details. But to summarise, whatever happens tonight, he isn’t looking for US inflation to fall quickly. That may bring back concern about potentially more aggressive FOMC behaviour. In this vein, Loretta Mester yesterday suggested that if inflation wasn’t falling by the second half of the year, the FOMC may need to increase the pace of its tightening. US stocks managed to eke out some small gains yesterday after the big falls earlier this week. But trading was choppy, and it could have gone either way. We don’t read too much directional steer into this for Asia’s open today. G-10 FX continued to show USD support, but movements were not large. EURUSD drifted down to about 1.0530 from about 1.0560 yesterday. The AUD still looks pressured lower and is about 0.6937 as of writing. Other Asian FX was fairly muted, though note there is a BNM meeting today, so a “no-change” which is on the cards, could see the MYR softening further. Bond markets were also fairly muted. 2-year US Treasury yields edged up slightly, but the 10Y US Treasury bond yield drifted back under 3.0%. 10Y JGBs have been drifting higher – challenging the 0.25% level, and breaching it intraday, so we may be due an official response of sorts imminently.    China: April CPI and PPI inflation rates are expected to slow from March due to lower metal and coal prices and weak demand for consumer goods. We will probably see higher prices for pork and fertilizer. This set of data reflects slower economic growth resulting from the Covid-19 social distancing measures. Korea: The Jobless rate remained unchanged in April at 2.7% (vs the market consensus of 2.8%) for the third straight month, while the labour participation rate improved to 63.8% (vs 63.5% in March), indicating that the labour market continued on a recovery track. Reopening is supporting employment growth in service sectors such as retail sales, recreation, and transportation. Despite a gloomier outlook for manufacturing, employment in that sector posted a solid gain for the eighth straight month. However, one potential caveat to this month’s report was that the majority of the employment growth came from the older age group (60+) while the 30’s (supposedly the most productive group) lost the most jobs. President Yoon Seok Yeol’s party has proposed a supplementary budget plan to the government this morning. Although the size was in line with the market expectation of about KRW33tr, it is noted that the extra budget would not require additional bond issuance. More details will be released tomorrow. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM What to look out for: China and US inflation Korea unemployment (11 May) China CPI and PPI inflation (11 May) US CPI inflation (11 May) Philippines 1Q GDP (12 May) US PPI inflation and initial jobless claims (12 May) Malaysia GDP (13 May) Hong Kong GDP (13 May) US Michigan sentiment (13 May) TagsEmerging Markets Asia Pacific Asia Markets Asia Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

It’s D-day of the week: we will see whether inflation in the US started easing in April after hitting a four-decade high in March, and if yes, by how much. A soft inflation read will come as a relief that the Federal Reserve’s (Fed) efforts to tame inflation start paying off, but any disappointment could send another shock wave to the market. In the FX, the US dollar extended gains, despite the easing yields yesterday, as the risk-off flows continued supporting the greenback For now, activity on Fed funds futures give almost 90% chance for a 50-bp hike in FOMC’s June meeting; there is a lot left to be priced for a 75bp hike, if the data doesn’t please. To avoid pricing in a 75bp hike at next FOMC meeting, we must see an encouraging cooldown in inflation. In the FX, the US dollar extended gains, despite the easing yields yesterday, as the risk-off flows continued supporting the greenback.   The barrel of US crude tipped a toe below the $100 level on news that the Europeans softened their sanctions proposal against the Russian oil The levels against the majors like euro, yen and sterling remained flat, but the positive pressure in the dollar, combined with Turkey’s unconventional monetary policy start giving signs of exhaustion. The dollar-try advanced past the 15 mark, and the government asked institutions to make their FX operations within the most liquid trading hours. Two weeks ago, the bank had revised its regulations on banks' reserve requirements, applying them to the asset side of balance sheets in order to strengthen its macroprudential policy toolkit. The latter required reserves now pressure the overnight rates to the upside – suggesting that the unconventional policy is near limits. Energy are up and down… but mostly up. The barrel of US crude tipped a toe below the $100 level on news that the Europeans softened their sanctions proposal against the Russian oil, but oil is already above the $100 this morning. The upside potential is fading due to slower global growth prospects, and the Chinese lockdown. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Watch the full episode to find out more! 0:00 Intro 0:24 All eyes on US inflation data! 2:30 Market update 3:50 Strong US dollar threatens lira stability 5:50 Risks in energy markets remain tilted to the upside 6.35 Why Chinese zero Covid policy won’t work 8.07 Coinbase hit hard by crypto meltdown 8:39 Energy, still the best option for investors Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.  

S&P 500 modest risk-on turn talked yesterday, is underway – with adequate support from bonds. That means the dollar is going to get under daily selling pressure, with positive consequences for assets spanning commonidities, precious metals and sure supporting tech as well (looking at TLT to cast a decisive vote for Nasdaq). Unfolding just fine, but what about the CPI effect? Likely to temper the oh so fast inflation theme, at least temporarily – and that would take pressure off the Fed‘s hand being twisted by the markets. Note though how both the 2-year and 10-year Treasury paused over the last days. Together with the arriving as anticipated negative quarterly GDP print, the temporary slowdown in pace of inflation would get an ally in retreating (especially long-term) Treasury yields reflecting the darkening real economy prospects. Time for a relief S&P 500 rally with both tech and value participation, if only HYG can perform somewhat better. Time for a relief S&P 500 rally with both tech and value participation, if only HYG can perform somewhat better. The bulls have a chance, and can run with it as best as they can. Cryptos thus far are modestly leaning in the „local bottom is in“ direction (in spite of the tectonic Tether developments), so the odds are for price gains across the board (at the expense of the dollar) during today – as long as markets interpret the upcoming CPI reading as slowing down / slowly peaking. Yes, since Jun 2020 when I started to talk early effects of inflation, the last week has been the first time when I raised the good likelihood of inflation making a local peak when May / Jun CPI readings come in, only to spring quickly back to life on the „economy is slowing, do something“ change in tune of demands made to the Fed. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM At these trying times for real asset bulls, let‘s take the proper precious metals perspective, enjoy the rich caption: It‘s the dollar, yields and miners coming back to life that would mark the coming upleg arrival Plenty of upside risk to become evident in 2H 2022, with my Monday‘s article covering the game plan for turnaround across the many assets on my daily watch. It‘s the dollar, yields and miners coming back to life that would mark the coming upleg arrival. Lean times until then. Read next: (EUR/USD) German Inflation Meets Forecasts, Pound Sterling Continues To Weaken (EUR/GBP, GBP/USD), (EUR/JPY) Japanese Yen Strengthens As Investors Seek Safe-Haven Assets| FXMAG.COM There, you can subscribe to the free Monica‘s Insider Club Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.

Today at 14:30 important macroeconomic data for the US economy will be published, which may also affect asset valuations outside the United States - we are talking about inflation data. In March 2022, inflation in the United States rose to 8.5 percent, which was the highest reading in 40 years. The rise in prices, in turn, may have affected several market measures. First, it forced the Fed to act, as the Federal Reserve is supposed to care about price stability and should raise interest rates if prices rise. This in turn could have influenced expectations of higher USD interest rates in the future and a strengthening of the dollar to levels last seen 20 years ago. Further expectations of rising rates could lead to an increase in bond yields, where for 10-year bonds they are in the region of 3%. The increase in bond yields, expectations of further tightening of monetary policy, and shrinking of the Fed's balance sheet, in turn, are information that could adversely affect the stock market, which in the case of the Nasdaq 100 index found itself in bear market territory. This spiral seen in many markets may continue until investors fully discount inflation, rising yields, and expectations of interest rate hikes. Interestingly, the latter had already begun to fall earlier in the week as recession fears increased. Currently, based on the federal funds rate contracts, the market is assuming a peak for hikes in mid-2023 at 3.00-3.25 percent. That's lower than the 3.5-.375 percent assumed as recently as the beginning of the month. The determinant, in turn, of whether there is a chance of full pricing for U.S. rate hikes may be where inflation will be. If this one peaks this six months and starts to fall, the market may stop assuming very aggressive Fed action. This, in turn, could bring relief to the bond market, the stock market, and also lead to the US dollar being close to its cyclical peak. Hence, today's and subsequent data on price growth in the U.S. economy could be so important. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The dollar got a fresh boost, with stocks coming under renewed pressure after a new batch of US inflation data. The annual inflation rate slowed from 8.5% to 8.3% The US consumer price index rose 0.3% in April after 1.2% a month earlier. The annual inflation rate slowed from 8.5% to 8.3% but was higher than the expected 8.1% y/y. Particularly worrying for markets is the development of core inflation. The corresponding index added 0.6% m/m and 6.2% y/y last month, higher than the expected 0.4% and 6.0%, continuing the sprawl of inflation. Higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response While the annual rate of core and core inflation seems to have peaked, higher-than-expected inflation is now positive for the dollar and weighs on equities as it suggests a more robust Fed response. With inflation far from the 2% target, the Fed will be inclined to act faster (raise rates more than 50 points at a time) or stop hiking at a higher level. A significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021 Locally, we see a tug-of-war around the dollar against the euro and yen near the lows of the past two weeks and swings against the pound and the franc near this week’s extremes. However, a significant risk demand indicator, bitcoin, has already moved out of the range with a lower boundary in January 2021. The S&P500 and Nasdaq futures were also pushed back to this week’s lows, indicating continued bearish pressure.

Gold dipped to $1832 on Wednesday morning, pulling back to a critical support line in the form of the 200-day moving average, losing more than 11% from the peak levels reached in early March. Gold has been losing buyers amid a jump in US government bond yields Gold has been under systematic pressure for the past month and a half amid a rally in the dollar. In addition to this increase in the underlying price, gold has been losing buyers amid a jump in US government bond yields. However, it is too early to talk about a break in the uptrend in gold, but only a retreat into deep defences ahead of essential data. Most of the time, the correlation between inflation expectations and long-term bond yields governs the dynamics in gold. Weak real bond yields lead to a pull in the precious metal as investors look to protect the purchasing value of capital.  A significant event for the gold outlook is today’s US inflation release With high interest rates and inflation control, investors prefer to earn yields in bonds by selling off gold. A significant event for the gold outlook is today’s US inflation release. The market reaction to this event could be decisive for gold in the coming days or weeks. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days Consolidation below $1830 on the day would be an essential bearish signal that could rapidly decline towards $1800. Moreover, there would be an immediate question of double-top formation through 2020 and 2022 peaks as an early signal of a long-term downward trend with a potential of $1200. If gold manages to develop a pullback from current levels, we could see a sharp increase in buying over the next few days, as we did in early February and late November. But unlike those episodes, this time, the bears might not wait for a quick reversal, and a further rally would be an important signal that gold continues to claw its way out of the prolonged correction. In this case, the nearest stops might be the levels near $1900, and further, the market might quickly target a renewal of the historic highs above $2075 before the end of the year. 

The inflation concerns are easing ahead of today’s US CPI reading. We doubt central bankers will back down so soon, however. Markets are coming around to our view that a peak is near in yields, but we think it might still be a couple of months away In this article US 10yr edges back below 3% on remarkable easing in inflation expectations The inflation scare is easing but beware of circular reasonings Global growth gloom means holding psychologically important levels will be more difficult Today’s events and market views The peak in yields may be near US 10yr edges back below 3% on remarkable easing in inflation expectations The juxtaposition between rising real rates and falling inflation expectations remains, and over the past 24 hours the fall in inflation expectations has been dominant. And that’s why the US 10yr yield has dipped back below 3%. Right now, US 10yr inflation expectations are in the region of 2.65%. They were in excess of 3%, albeit briefly, a few weeks back, at which point talk of a 75bp hike in June were sounding like a solid call. Now that inflation expectations are well down, the 50bp promised looks fine. "10yr real rate in the area of 1% would not look out of whack" Meanwhile the 10yr real yield is now above 30bp. Add that to the inflation expectation and we get the sub-3% 10yr Treasury yield. The move higher in the real yield has been spectacular. Back in March it was deeper than -100bp. The move to 30bp is a sign that the economy has morphed away from the need for ultra-loose policy. And a continued move higher takes it towards a more normal footing. In fact a 10yr real rate in the area of 1% would not look out of whack. If we got there, inflation expectations would fall far more. The adjustment higher in real yields is a threat to risk asset valuations Source: Refinitiv, ING   Today’s US CPI number will be important, but not determinative. In other words it should not have a material impact on the 10yr inflation expectation. That said, if it’s an outsized / surprise number, it’s then more likely to have an impact out the curve. Our central view is in line with the market view, where we do see a fall in contemporaneous inflation, consistent with the recent tendency for inflation expectations to ease lower. We’ve been surprised by this though, and think it’s too early to call it a trend. The inflation scare is easing but beware of circular reasonings The ‘peak inflation’ narrative should receive a boost from slowing US annual headline and core inflation readings today but we would be cautious about chasing the move lower in rates. As always, forward-looking markets could apply a heavy discount to central bank rhetoric but an acceleration in monthly core CPI means Fed officials are unlikely to change tack just yet. One should also remember that the decline from the inflation peak will be very slow indeed, keeping pressure on the Fed to act. Swaps show inflation is no longer the market's only concern Source: Refinitiv, ING   US CPI and Eurozone HICP swaps have dropped significantly this month Further afield, inflation compensation offered by US CPI and Eurozone HICP swaps has dropped significantly this month. Should markets conclude that central banks can now afford to be less hawkish? Only up to a point. To some extent, the drop in inflation swaps is owing to a deteriorating global macro environment, but the post-FOMC timing of this drop also suggests that it has at least as much to do with expectations that central banks will deliver on expected tightening. We would be careful with such circular reasonings. Global growth gloom means holding psychologically important levels will be more difficult For an example of the doubt setting in investors’ mind about central banks’ ability to tighten policy, look no further than yesterday’s better-than-expected German (Zew) and US (National Federation of Independent Business) sentiment indicators. None of the readings was enough to alleviate global growth gloom but the NFIB details in particular could have brought inflation fears back to the fore. We suspect it is too early to call the end of the hawkish re-pricing, with central bankers still very much on their front-foot when it comes to delivering monetary tightening. Bonds risk failing a psychologically important test Source: Refinitiv, ING   We have sympathy with the growing view that there is a short time limit to this tightening cycle We think a better candidate for a peak in yields in this cycle is during the third quarter of this year, after the ECB’s expected first hike and after the couple of additional 50bp hikes the Fed has committed to. This being said, turning points are notoriously difficult to pick and we have sympathy with the growing view that there is a short time limit to this tightening cycle. Should 10Y bonds fail to hold on to their recent jump above the psychologically important levels of 3% for Treasuries and 1% for Bunds, it may take a lot of good news to test these levels again. Today’s events and market views Germany (10Y) and Portugal (8Y) make up today’s Euro sovereign supply slate. This will come on top of a dual tranche NGeu syndicated deal in the 3Y (new issue) and 30Y (tap) sectors. In the US session, the Treasury will auction 10Y notes. The main release of note in the afternoon will be the April CPI report. Consensus is for the annual readings to cool down from the previous month but a monthly acceleration in core could muddy the picture for rates. There is also an extensive list of ECB speakers on the schedule, culminating with interventions from Christine Lagarde and Isabel Schnabel. TagsRates Daily   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

US inflation has slowed marginally in April thanks to a fall in used car prices and gasoline. Fed rate hikes will bring demand into better balance with supply, but in the absence of major improvements in supply chains, labour shortages and geopolitical tensions the descent back to the 2% target will be slow In this article Inflation finally slows Past the peak? Housing will make inflation especially sticky Fed has a lot more work to do Rental prices continue to remain elevated 8.3% Annual rate of inflation for April 2022   Inflation finally slows In the immediate aftermath of the pandemic amid plunging energy, air fare and hotel prices, inflation bottomed at 0.1% year-on-year in May 2020 and has been on a rapid climbed to 8.5% ever since. Today though, the annual rate of US consumer price inflation has slowed from 8.5% in March to 8.3% in April. The core rate, which excludes food and energy prices slowed marginally more to stand at 6.2% versus 6.5% in March. While this was in line with our forecasts, the market had been looking for a larger moderation with consensus forecasts of 8.1% for headline CPI and 6.0% for core. The details show energy prices fell 2.7% month-on-month on lower gasoline costs, but this will be fully reversed next month given gasoline is back at all-time highs. Used car prices fell 0.4% MoM, not as much as hoped given the Mannheim car auction data, while apparel fell 0.8% after a strong series of price hikes. Everything else was firm though with food prices rising 0.9% MoM, new vehicles up 1.1% and primary rents (0.6% MoM) and owners' equivalent rent up 0.5% MoM. Airline fares jumped another 18.6% MoM! The chart below shows the contributions and clearly shows there is a moderation in core goods prices (orange bars), but this is being offset to a large extent by the service sector (yellow). Contributions to annual US inflation Source: Macrobond, ING Past the peak? We think that March 2022 will have marked the peak for annual inflation. Mannheim used car auction prices are down 6.4% over the past three months so used vehicle prices should fall further and they have quite a heavy weight of 4.1% of the total basket of goods and services within CPI. The shift in consumer demand from goods, whose availability has been significantly impacted by supply chain issues, towards services should also contribute to a gradual moderation in the rate of inflation. Nonetheless, we remain nervous about the impact from gasoline and the growing price pressures within services. Moreover, substantial declines in the annual rate of inflation are unlikely to materialise until there are significant improvements in geopolitical tensions (that would get energy prices lower), supply chain strains and labour market shortages. Unfortunately, there is little sign of any of this happening anytime soon – The Russia-Ukraine conflict shows no end in sight, Chinese lockdowns will continue to impact the global economy while last Friday’s jobs report showed a decline in the labour force participation rate leaving the economy with 1.9 job vacancies for every unemployed person in America. At the moment consumer demand is firm and businesses have pricing power, meaning that they can pass higher costs onto their customers. This was highlighted by yesterday’s National Federation of Independent Businesses survey reporting that a net 70% of small businesses raised prices over the past three months, with a net 46% expecting to raise prices further. We haven’t seen this sort of pricing power for the small business sector before and we doubt it is any weaker for larger firms. NFIB survey shows firms can continue to pass higher costs onto customers Source: Macrobond, ING Housing will make inflation especially sticky Furthermore, the housing market remains red hot and this feeds through into primary rents and owners’ equivalent rent (OER) components of inflation with a lag of around 12-18 months. Rent contracts are typically only changed once a year when your contract is renewed so it takes time to feed through while OER is a based on a survey question for what you would rent the house you own out for. Homeowners may not necessarily closely follow the month-to-month changes in the housing market so there is a delayed response. As the chart below shows, the housing components, accounting for more than 30% of the CPI basket, are not likely to turn lower soon. No reason to expect an imminent turn in rent components Source: Macrobond, ING Fed has a lot more work to do This situation intensifies the pressure on the Fed to hike interest rates. The central bank wants to take some of the heat out of the economy and bring demand back into better balance with the supply capacity of the US economy. This potentially means aggressive rate hikes and the risks of a marked slowdown/recession. This message was re-affirmed by several officials over the past couple of days and we look for 50bp rate hikes at the upcoming June, July and September FOMC meetings. With the Fed running down its balance sheet we expect the Fed to revert back to 25bp from November onwards with the target rate peaking at 3.25% in early 2023. Even with this Fed action and hopefully some improvements in the supply side story we have doubts that CPI will get back to 2% target before the end of 2023. TagsUS Recession Inflation Federal Reserve   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Gold held near three-month lows near 1,825 USD per ounce on Friday and is falling for the fourth week in a row from 1990 USD. One factor for the decline in gold prices could be the strengthening U.S. dollar, which seems to have stabilized near the 20-year high reached on Thursday. The USD strengthening may have followed the release of US consumer and producer inflation data, which seems to reinforce expectations of aggressive interest rate hikes by the Federal Reserve. This, in turn, may raise concerns about a weaker global economic outlook, helping to boost USD demand. The recent strengthening of the USD may also be related to the divergence in monetary policy on both sides of the Atlantic Recall that the U.S. core CPI remained near a 40-year high of 8.3 percent in April, while the core CPI also exceeded expectations at 6.2 percent, fueling fears that high price levels may persist. Thus, markets are anticipating increases of 50 basis points at each of the next two Fed meetings in June and July. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM This could also be significant for the EUR/USD major pair, which approached the 1.0350 level this week, its lowest level since December 2016. The recent strengthening of the USD may also be related to the divergence in monetary policy on both sides of the Atlantic. The Fed is moving towards aggressive hikes, while the European Central Bank may raise interest rates by 50-75 basis points in total by the end of the year. Thus, the scale of divergences seems to be very large. Bitcoin rebounded yesterday from its lowest level in almost 17 months and crossed the $30,000 mark today In addition to gold and the dollar, attention should again turn to the cryptocurrency market and towards stock market indices, where in both cases an attempt to defend against possible further declines may be underway. Bitcoin rebounded yesterday from its lowest level in almost 17 months and crossed the $30,000 mark today. Despite this, the world's most popular and widely used cryptocurrency is at this point on its way to its worst week in four months, falling more than 10 percent. Yesterday, the market additionally saw a likely panic as the tether to USD exchange rate departed at 1:1. At the apogee of fears for the collapse of the largest stablecoin, the cryptocurrency market seemed to have reached its weekly lows. Currently, USDT is trying to get back to the 1:1 exchange rate, and the rest of the market seems to be stabilizing. Read next: (BTC) Bitcoin’s Price Tanks Along With Equities. U.S. Stock Market Awaits CPI Report, Poor Performance From The FTSE 100. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Rates Spark: Feeding the doves ECB President Lagarde's lack of pushback bull steepened euro curves as markets pencil in a high probability of early rate cuts. There may be less dovish sounds in coming days as other ECB speakers take the stage. Thursday's US data had something for all, but were net bullish for bonds. However, the March cut expectation still has some unwind to get done. US data on Thursday is bond supportive, but we're still not getting a March rate cut. That still needs to be unwound The strong US fourth quarter 2023 GDP number makes it more likely that first quarter 2024 will be weaker, according to our economist James Knightley. Inventories are going to be making a negative contribution and trade is likely to also swing back to becoming a headwind while consumer momentum is also slowing somewhat. Early days, but we are pencilling in a 1-1.5% figure for the first quarter – the current consensus is for GDP growth of just 0.6%. Also, the Fed's favoured measure of inflation – the core personal consumer expenditure deflator – has come in at 2% annualised for the second quarter in a row. Inflation on these measures has tamed, but growth has not, or at least not yet. We saw yery jumpy price action. But there is nothing here to accelerate a rate cut in March in any meaningful way, and that’s been the biggest driver of the 10yr yield since the beginning of the year. So, it does not surprise to see yields tempted lower on a temporary basis as the price data is indeed good. But the activity data is enough to result in the reaction into next week being one of a further edge higher in the 10yr yield. These are fine lines though as we don’t anticipate a big bear market. Far from it, as we see yields lower by mid-year, and well ahead of that. But the stars have not yet aligned to take a second leg lower in yields just yet. Also an interesting side impression can be taken from the Fed’s now likely decision to end the Bank Term Funding Facility when it runs to its natural course in March. We think it’s a mistake to end it just now (better to extend for six months), but ending it exudes a sense of Fed comfort on the system. This is important, as if there is no stress to the system, there is no mad need to get a cut in early and run the risk that it's too early. Remember we still have both headline and core CPI rate running with an uncomfortable 3% + handle. The job is almost done, but still not done yet on those measures. So we see the 10yr yield edging net lower, and we’re not surprised by it. But we’d fade the move on a one week view.   Curves bull steepen as markets expected more pushback from the ECB Thursday’s highlight in Europe was the European Central Bank’s monetary policy meeting. The main message was as predicted: unchanged. But an immediate 10bp drop of the 2-year Bund yield suggests that markets expected more pushback between the lines against an early rate cut. Lagarde explicitly standing by her December comments about the possibility of summer cuts was probably enough to feed the doves. And while reiterating the importance of wage growth data, she continued by stating that a rate cut decision would be based on a range of data inputs, including the inflation figures from January and February and the March projections. This comment could have had the dovish interpretation that the ECB can start cutting without April’s wage data if the other price data comes in low enough. Despite the dovish interpretation by markets, our economist maintains the view that rate cuts will have to wait until June. Inflation remains closer to 3% than 2% and geopolitical risks have also become more apparent in the ECB’s assessment. Only a severe recession scenario would warrant earlier cuts. The bull steepening on the back of the press conference could unwind again in coming days as the more hawkish voices of the Governing Council return to the public.   Friday's events and market view Friday’s main data release is the US PCE deflator for December, although the quarterly data provided alongside the GDP release confirmed expectations of a reading in line with the Fed’s 2% target. In the eurozone we will get M3 data as well as the Survey of Professional Forecasters, but the main attention will fall on ECB speakers given the markets' dovish reaction to the press conference. Next to a dovish Panetta, there will also be appearances of the hawks Vujcic and Kazaks.