International monetary literature abounds with historical and empirical studies of correlated global monetary policy cycles.
This time no different.
In this current backdrop of unwind of the great sovereign bond bubble (that peaked when $18 trillion of negative yielding securities floated around), apprehensions of global spillovers will make central banks wary of acting too far out of step.
Except some mavericks, don't expect any one to cut rates in this current context, as selloff in US Treasuries goes global and that European & Asian yields got hit hard (particularly in Japan.)
After seismic ripples from US CPI, March wholesale prices a bit subdued - however inflation breakeven are little changed, holding higher levels. On the goods side, if commodity prices continue higher, it will eventually be reflected in parts of the supply chain.
After weak 3 yr & bad year auctions, the 30 yr was not good but still better - markets see there is little incentive to buy long bond in a fiscal dominance regime.
ECB watchful of sticky inflation while seeing moderation in wage growth. ECB to certainly start dialling down expectations of June rate cut. Just see Bunds- they don’t care ECB- Yield spreads tighter - 10yr bund +5bp to 2.477%. Current dynamics suggest US data is the primary driver of EUR/USD- 1.0699 NY low and then 1.0695 2024 base to give way sooner or later.
Consumer prices barely increased from a year earlier and PPI showed that industrial prices continued to slump - still ongoing deflationary pressure in China’s economy and hence no respite - Chinese names reportedly moving in herds into Gold led by PBoC - USDCNY to blow through 7.35?
Green saw the global headwinds and changed track by saying UK's persistence of inflation pressure is worse than US and rate cuts are "way off".April 17 UK CPI/PPI only of academic interest. GDP numbers might offer hints about UK economy. However, Yesterday's fall has left a bearish setup in GBPUSD. Resistance at 200 dma 1.2586, 1.2610 50% Fib of 1.2709-1.2511 - set to break 1.2501 Dec 13 trend.
Jawboning continues- however Price action is bullish, with small dip to 152.76 scooped up- short-term 161.8% Fibo nearby at 153.78- But major Fibos from 2023 bases are key targets by 155.20 after which we have June 1990 monthly high at 155.78 & Apr 1990 high at 160.32.
We don’t care where the world goes - we continue with usual offers at 83.45 to cap and strangulate the range 83.25 83.45.