Morning Brief – US Consumer Price Index

US Consumer Price Index

Yesterday’s release must rank as one of the most closely watched numbers for many years given the Federal Reserve’s rhetoric, in the context of its rate rising policy, the mixed US economic picture and now the banking contagion fears following the failure of 3 sizeable US banks. Before the release, expectations for a rise on March 22 had been pared back to either no rise or a max of 25bps. Now with a rise of an inflation adjusted core CPI of 0.5% the annualised rate of 5.5% is too high for the Federal Reserve to say that inflation is on the run. But….with the market fragile and bank stocks suffering, it is likely that rates will rise a max of 0.25% next week. EUR/USD 1.0720.

UK Wage Inflation

As the Bank of England sifts the data leading up to the Monetary Policy Committee meeting next week, the cooling of wage inflation yesterday tilted the likelihood towards a pause or a modest 25bp rise. The average weekly salary in the UK fell by 2.4% in the 3 months to January. Vacancies remain high at 1.1 million which is 328,000 more than the period of January to March 2020. GBP/USD 1.2165

France

With President Macron’s plans to raise the pensionable age from 62 to 64, refuse collectors are voting by halting refuse collections. That means that in cities including Paris, Nantes, Le Havre and Rennes the rubbish is piling up causing unsavoury odeurs and a plague of rats. French refuse collectors currently retire at 57 and have been told they will have to work an additional 2 years. GBP/EUR 1.1330.

Gold

With gold slipping back to USD 1910 it is clear that with the initial panic caused by the US bank failures over the weekend that despite treasury bill yields falling back to 4.92%, that represents a better bet for yield hungry investors than gold. That means that gold is capped until at least…any further contagion fears.

Puppy Love

This day in 1972 Los Angeles police raided the radio station KHJ because they had been alerted by listeners concerned for the welfare of the staff and DJs. Why? The station had been playing Donny Osmond’s then new single Puppy Love solidly for 90 minutes. Far be it for us to say that their concerns were well placed but….

And they called it puppy love
Oh, I guess they’ll never know
How a young heart really feels
And why I love her so

And they called it puppy love
Just because we’re in our teens
Tell them all, please tell them it isn’t fair
To take away my only dream

I cry each night my tears for you
My tears are all in vain
I’ll hope and I’ll pray that maybe someday
You’ll be back in my arms once again

Someone, help me, help me, help me please
Is the answer up above
How can I, oh how can I tell them
This is not a puppy love

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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