Still too hot -Breaking
Danilo Masoni gives a glimpse at the future.
It is unlikely that the U.S. will return to under-inflation levels overnight. Those who expected a signal of peak price pressures were disappointed.
The April hot consumer prices data left the bets on Fed tightening generally intact, and they brought with them the possibility that an unavoidable hard landing for the top economy in the world.
Although the headline number fell below its 40-year peak, it did offer some relief, and helped world stocks, which were already in bear market territory after a kneejerk plunge, to regain their footing. However, this bounce was brief-lived.
The Nasdaq lost more than 3% in its last five days since March 2020. Asian shares took the loss with a 2.5% decline to close to 2-year lows. European equity futures indicate a grim day ahead.
Treasury yields fell sharply due to the possibility of a recession. However, they are now expected to drop further today. Meanwhile the dollar has risen to an all-time high of 20 years. For the fifth day in a row, Wall Street’s fear gauge has been above 30.
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”.
The same goes for oil. The cryptocurrency market is in meltdown mode, with TerraUSD (the stablecoin TerraUSD) collapsing below $27,000 and giving up its gains of 2021.
Even positive soundings about the earnings season in Europe might not be enough to save the day. 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