Stocks Drop Ahead of CPI Data – Nasdaq Down 0.65%
US stocks declined ahead of key inflation data later today which will play a big role in whether the Fed cuts rates in June. The Nasdaq led the way lower, dropping 0.65% by the close whilst the S&P 500 lost 0.48% with the Dow losing just 0.02% on the day. The dollar was mixed against major currency peers within tight ranges with USDJPY still loitering under 152 along with the threat of intervention remaining. Treasury yields eased back from their 2024 highs, the benchmark 10-year back to 4.36% losing 6 basis points on the day. Gold advanced as much as 1.1% to hit another record high at $2,365.35 an ounce as Treasury yields declined across the curve and Oil dropped again as Israel advised that it was making progress in negotiations for a cease-fire in Gaza, WTI -1.3% to $85.30 with Brent crude off 1% to $89.47.
Investors Poised Ahead of CPI Data Print
Markets remain on edge with ranges tightening up and turnover dropping ahead of the US CPI print. There is an increasing debate that puts a June pivot into question, given how resilient the economic data has been of late. If we see March inflation data surprise to the upside, a delay to the start of the first Federal Reserve rate is a first consideration. Traders are aware that it was only a couple of months ago that we were pricing in a March cut. Now that meeting has come and gone, expectations are being pushed even further down the curve with some experts not expecting any movement from the FOMC until September. If we do see a print higher than the expected 0.3% increase in either the core or headline number, then expect more upside for the dollar and some potential pain for the stock markets.
Busy Day Ahead for Traders
The event calendar points to a very busy day for traders today with some major central bank rate calls as well as the key US inflation number ahead. The RBNZ brings New Zealand markets into focus early in the Asian session with its latest rate call and statement before New Loans numbers out of China take investor focus later in the day. The European session has little on the calendar, but we have potentially the session of the week once New York opens. First up we have the key US CPI inflation data due out before attention jumps north of the border to Ottawa and the Bank of Canada’s rate call. The session is then bookended with the latest Fed Meeting Minutes released before the baton is once again handed to APAC traders.
