Taking in all the information, futures markets still show a near 75% chance of another quarter point rate rise to the 5.0-5.25% range in May, but more than 60 basis points of cuts from there to yearend.
Two-year Treasury yields were stuck at 4%, with producer
price inflation and weekly jobless up next on Thursday's data
calendar. Wall St stock futures were back in positive territory.
Signs that a global recession may indeed be avoided while
inflation ebbs has many investors once again pondering the
possibility that the Fed may indeed pull of a rare 'soft
landing' for the economy.
Removing his forecast for a June rate hike to follow next
month's move, Goldman Sachs chief economist Jan Hatzius still
thinks a soft landing can be achieved.
Certainly Thursday's news of a surprising surge in China's
exports last month eased concerns about world demand and some
fears about the strength of the recovery in the world's second
largest economy.
Along with benign world growth forecasts from the
International Monetary Fund this week, equity investors remain
reluctant to throw in the towel - even if they are now focussed
on defensive stocks, quality mega-caps and 'value' plays in
relatively cheap European and Japanese indices.
As a case in point, the bluest of blue chip European stock
indices, the STOXX50 , hit its highest in 22 years on
Wednesday and Warren Buffett doubled down on his bet on Japan's
big brokerages.
That taste for European blue chips was underlined on
Thursday as LVMH , the world's largest luxury company,
gained 4.6% after reporting a 17% jump in first-quarter sales
that breezed past estimates as business in China rebounded.
European markets were further pepped by reports the European
Central Bank was minded to downsize its rate hikes to a quarter
point in May after six successive half point moves.
One potential negative fallout from the relatively upbeat
U.S. and China growth and inflation pictures is this week's pop
in oil - although year-on-year Brent crude prices are
still falling at whopping 20% pace and should continue to weigh
on annual inflation rates through April.
Key developments that may provide direction to U.S. markets
later on Thursday:
* U.S. March producer price inflation, weekly jobless claims
* Bundesbank President Joachim Nagel, Bank of Canada governor
Tiff Macklem and Bank of England chief economist Huw Pill all
speak
* U.S. President Joe Biden in Ireland
* U.S. Treasury auctions 30-year bonds
* U.S. corporate earnings: Delta Air Lines, Fastenal
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China exports surge As US goods inflation eases, services step in US interest rates and inflation Foreign flows into Japanese stocks & futures ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(By Mike Dolan, editing by Raissa Kasolowsky
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
