Still too hot -Breaking
Danilo Masoni gives a glimpse at the future.
It is unlikely that the U.S. will return to more manageable inflation levels overnight. Those who thought they would see a sign that prices were peaking have been disappointed.
Hot consumer price data in April did not make it clear that Fed tightening was on the cards. However, they do raise the possibility of a difficult landing for the global top economy.
While the headline figure fell to below 40 year’s peak provided some comfort for world stocks that were already facing bear market territory due to their initial kneejerk plunge, this did help them regain their feet. However, this bounce was brief-lived.
Over 3% fell in the Nasdaq, marking its largest five-day decline since March 2020. Asian shares were able to absorb the pain, with 2.5% dropping to near 2-year lows. European equity index futures point to a dark day.
Treasury yields fell sharply due to the possibility of a recession. However, they are now expected to drop further today. Meanwhile the only victor appears to have been the US dollar. It has risen to an all-time high of 20 years. The Wall Street fear gauge has risen to 30 points for the fifth straight day.
During this time, central bank governors, Japan’s finance ministers, and South Korean finance ministers, warned about the risks for Asia’s recovery from the COVID-19 pandemic, as well as early interest rate increases “in some advanced countries”.
Oil is also falling. The cryptocurrency market is in meltdown mode, with TerraUSD (the stablecoin TerraUSD) collapsing below $27,000 and giving up its gains of 2021.
The earnings season in Europe is not expected to produce positive results. According to Refinitiv I/B/E/S data, analysts now expect profit growth of over 40%. This is a significant increase from the 20% predicted two months ago.
U.S. CPI https://fingfx.thomsonreuters.com/gfx/mkt/zgpomlozmpd/Morning%20bid.PNG