The U.S. Dollar stayed in mostly familiar ranges overnight, following a day characterized by divergent yield offerings in the treasury bond market.
Overview
Faith in the U.S. tightening as well as predictions of ongoing inflationary growth brought the 10-year yield to a fresh new high since 2018 at 2.83%. While we see that domestically, other central banks are weighing the difficulties of increasing borrowing costs during a time of uncertainty and global disorganization.The World Trade Organization said in their assessment of the Russia/Ukraine conflict that commercial trade will be negatively impacted for a long time as it is already splintering. Global growth optimism is currently at its record low per a survey by Bank of America highlighting fears of recession.Inflation data in the form of the Consumer Price Index released this morning showed a 1.2% increase in March as expected while the Year-on-Year average grew to 8.5%. A gauge of Small Business Optimism was even lower than expected, worth noting it has dropped consecutively since the end of December. Let us hope for some better headlines as the data-heavy week rolls on.
What to Watch Today…
- No major economic events scheduled for today
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EUR
The Euro returned to its weakening trend this morning as the situation in Ukraine gets more intense and brutal, especially as Russia attacks the Eastern front to establish territorial gains. Poland and some Baltic republics are proposing a full embargo on Russian oil imports and more but continue to meet resistance from members of the EU who claim it would only add to European economic catastrophe.
Nevertheless, leadership from Germany to Bulgaria is frustrated that six weeks of trying to isolate the Russian financial system has failed to slow down the war. We shall see how much more leaders will agree on doing, but frustration is clearly mounting.
GBP
Sterling has not been much of a mover recently, but it is worth noting its volatility following some serious pieces of data. Its Monthly Gross Domestic Product figure for February came in under expectation and was much lower than in January. Additionally, Industrial and Manufacturing Production came in with contractions. Today, labor data also shows some underwhelming numbers, with Payrolled Employees expanding by 35K vs. 125K, and the prior figure was also revised downward.The Bank of England will not meet until May, but there is a chance that global conditions and the dents to the economy from the supply-chain woes could slow down the BOE’s plan to use contractionary measures such as hiking by more than 25-basis points in an upcoming meeting.
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