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
Japanese Yen With JPY at a new 34 year low versus EUR, the market is set for an ambush by the Bank of Japan if it acts today at the end of their Policy Meeting to support the Yen. The reason that the market is susceptible is because it has convinced itself that the BoJ […]
Too soon to call USD lower Those following the US Dollar’s performance in the markets would have noted a recent downturn accelerating as this week has progressed. There have been two factors driving this sell-off but it is far from certain that either may endure long enough to push the Dollar index back to its […]
Milan, Italy The City of Milan has a late night noise problem and so it has acted unilaterally to resolve it-Italian style. A ban on the sale of take away food including ice cream and pizza after midnight is being imposed to protect the “peace and health of residents.” Here in the UK late night […]