DXY firmed last night:
AUD fell:
With North Asia:
Oil and gold too:
Copper is coiled:
Ask the Easter Bunny why RIO rallied:
EM may be coiling for reflation:
Junk is grinding on:
Yields popped:
But stocks rocked:
US inflation was hot but the composition reassured bulls:
February core CPI rose 0.36%, 6bp above consensus expectations, and the year-on-year rate fell by less than expected to 3.8%. The composition was disinflationary however,w ith a sharp normalization in non-housing services inflation and a return to the Q4 trend for the owners’ equivalent rent category.
We also expect the rise in used car prices to more than reverse this spring.
On the positive side, communications prices increased sharply for the second straight month and will boost the PCE measure.
We now tentatively expect core PCE prices rose 0.27%in February (mom sa) and will update our estimate after this week’s PPI and import price data.
We continue to expect the FOMC to leave the Fed funds rate unchanged at the March meeting and to begin the easing cycle in June.
As you can see, so long as OER keeps falling, the Fed cuts will be on track. It is a huge component of enduring Core Inflation.
So, the AUD probably has more upside over the next few months.
