The S&P500 and MSCI's global stock index have hit their highest in more than two months as U.S. consumer and producer price reports for March showed a faster drop in inflation than most had expected and as the tight labor market weakens gradually. Next month's expected interest rate rise from the Federal Reserve is now expected to be the last and futures see up to 70 basis points of cuts from that point to year-end. And with China's booming trade numbers for last month also suggesting the world economy at large will comfortably skirt recession this year, "soft landing" hopes are back in vogue. China's economic surprise index, for example, hit its most positive reading in 17 years. Although stock futures gave back a little ahead of Friday's open, Wall St's VIX volatility gauge recorded its lowest close on Thursday since the start of last year.
The combination of ebbing bond yields and easing stress is
seeing the dollar take much of the heat, with the DXY index that measures its strength against other leading
currencies hitting its lowest in a year early on Friday.
And with disinflation and rate cuts expected to proceed
faster in the United States than in Europe, the U.S.-Germany two
-year bond yield premium hit its lowest since late
2021. The euro hit its highest since March last year.
Bank earnings aside, Friday also sees the release of U.S.
retail and industry figures for last month.
For inflation watchers, oil prices slipped back
again as the International Energy Agency said rising global oil
inventories likely influenced OPEC's recent decision to cut
supply - noting that OECD industry stocks in January hit their
highest level since July 2021.
Year-on-year crude prices are down 23%.
Elsewhere, Singapore's central bank left its monetary policy
settings unchanged, reflecting the city-state's concerns about
its growth outlook and surprising economists who had expected
another round of tightening.
The tense geopolitical backdrop was focussed on North Korea,
which announced it had tested a new solid-fuel intercontinental
missile - a development experts said would facilitate missile
launches with little warning.
Key developments that may provide direction to U.S. markets
later on Friday:
* U.S. March retail sales, industrial production, import/export
prices; April University of Michigan consumer sentiment, Feb
business/retail inventories
* U.S. Federal Reserve Board Governor Christopher Waller speaks.
Bundesbank President Joachim Nagel speaks; Bank of England
policymaker Silvana Tenreyro speaks
* U.S. corporate earnings: JPMorgan, Citigroup, Wells Fargo,
BlackRock, PNC Financial Services, UnitedHealth
* Brazil's President Luiz Inacio Lula da Silva meets China's
President Xi Jinping in Beijing
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Dollar, VIX and yield spreads lowest in over a year U.S. earnings outlook U.S. inflation U.S. jobless claims ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(By Mike Dolan, editing by Christina Fincher,
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
