The big news yesterday was US CPI. Core inflation fell from 3.9% in January to 3.8% in February. It had been expected to fall to 3.7%. All in all slightly hotter than predicted and as one would expect yields moved higher off the back of the data, the 2yr went from 4.54% to near 4.6%, but the market still expects cuts in the summer.
Yesterday also saw data out of the UK. The unemployment rate ticked up from 3.8% to 3.9% and earnings fell more than expected from 5.8% to 5.6%. Signs of labour market cooling will be welcome news to the Bank of England who are looking for evidence of persistent disinflation before they start lowering rates. We had GDP data a few minutes ago and it showed growth of 0.2% in January and -0.1% 3M/3M, meaning BOE Governor Andrew Bailey may have been correct in predicting the UK recession will be short and shallow.
Overnight Japanese equities declined after Toyota, among other companies, agreed to pay increases for staff at annual negotiations, providing evidence that recent wage growth has initiated a virtuous and sustainable wage-price cycle that will bolster the Bank of Japan in their attempts to exit the world's final remaining negative interest rate regime.
Today the data and speakers are euro-centric: we have Eurozone industrial production data, Volkswagen and Adidas earnings, and Cipollone and Stournaras from the ECB are both scheduled to speak.
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