Hot inflation print sees equities slow

Last week saw US stocks retreat from recent highs as a higher inflation reading caused many investors to pare back their interest rate cut expectations, writes Ian Slattery.

On Wednesday, the US Bureau of Labor Statistics released their monthly CPI report indicating that headline inflation increased in March to 3.5%, up from 3.2% in February. Consensus expectations from economists had been a 3.4% figure for March.

Meanwhile Core CPI, which strips out the volatile food and energy sectors, remained steady at 3.8%. Consensus forecasts for the Core measure had been that the figure would show a decline to 3.7% in March.

On the same day, minutes were released from the Federal Open Market Committee’s (FOMC’s) latest policy meeting. The minutes indicated that many FOMC members had expressed concern that inflation levels are not moving lower at a fast enough pace to warrant interest rate cuts. The minutes concluded that the Fed would not be lowering rates until it gained “greater confidence” that inflation was on a stable path to its 2% target.

The market has now signalled that investors are expecting two Fed rate cuts in 2024. The benchmark 10 Year US treasury yield rose throughout the week as a result, ending the week at 4.52% up from 4.40% the previous week.

In Europe, most major stock indices were also lower in the region, apart from UK equities, which benefitted from Sterling weakness. Within the Eurozone, Thursday saw the European Central Bank (ECB) decide to hold rates steady as expected, with the key deposit rate remaining at its record high of 4.0%.

In the ensuing ECB press conference however, President Christine Lagarde indicated that a rate cut at the central bank’s June policy meeting may be a real possibility, stating that if the June inflation assessment proved favourable “it would be appropriate to reduce the current level of monetary policy restriction”. Recent weeks have seen a slight divergence in the policy paths of the world’s two major central banks.


Global stocks were up last week by 0.3% in euro terms and down -1.5% in local terms. Year-to-date global markets are up by 10.3% in euro terms and by 6.2% in local terms. The US market, the largest in the world, finished up 0.2% in euro and -1.5% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.5% last week. The German equivalent finished at 2.4%. The Irish 10-year bond yield finished at 2.8%. The Euro/US Dollar exchange rate finished at 1.06, whilst Euro/GBP finished at 0.86.


Oil finished the week at $86 per barrel and is up 24.0% year-to-date in euro terms. Gold finished the week at $2,344 per troy ounce and is up 17.9% year-to date in euro terms. Copper finished the week at $9,333 per tonne.

The week ahead

Tuesday 16th April

US Housing Starts report is issued.

Wednesday 17th April

Eurozone CPI figures are released.

Thursday 18th April

US Initial Jobless Claims report goes to print.

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