US stocks begin little changed; CPI and ECB in focus


  • US indices mixed after Tuesday’s declines

  • ECB president Draghi dovish in press conference

  • US CPI Y/Y: +1.9% vs +1.8% expected


US stock markets this afternoon have begun little changed from last night’s closing levels, with the major benchmarks pausing after Tuesday’s declines. The selling seen yesterday was far from dramatic but it did mark the end of an 8-day winning streak for the S&P500 during the cash session and while it seems premature to call a top there is some suggestion that there’s a bit of a pullback ahead.

The market is now back below the H1 cloud and could be set for a further pullback with recent lows of 2877 the first level to look to below. Source: xStation


As arguably the second most important central bank the ECB rate decisions always have the impact to drive global risk sentiment, and while we’ve not had any major developments from Frankfurt this lunchtime, Mario Draghi has struck a pretty dovish tone. Selected comments from the President’s press conference are as follows:

  • Risks to the eurozone still tilted to the downside

  • Inflation likely to decline in coming months

  • Ample degree of stimulus needed  

  • It’s too early to decide on tiered negative rates

  • Haven’t discussed it but can’t rule out purchasing equities

  • We have plenty of instruments


To summarise, the message could be seen as a bit of a dovish turn from the ECB with the tone surrounding remarks on further stimulus suggestive that is not seen as that unlikely that the bank may need to provide further accommodation. The German Dax has moved back above the 11900 in recent trade as bonds have gained and the Euro fallen back lower.

German 10-year bonds have steadily gained since Draghi started talking, suggesting the market sees this as a dovish message. While a move of half a handle isn’t huge it has been a pretty consistent rally during the press conference. Source: xStation


At the same time as Draghi began speaking we got the latest inflation data from the US with the CPI Y/Y for March coming in at 1.9%. This was marginally higher than the 1.8% expected and comfortably above the 1.5% seen prior. The core reading was a little soft however with a print of 2.0% vs +2.1% expected in Y/Y terms. The latest readings mark something of a bounce after a sustained decline, but overall the signs are that inflation continues to run about at the Fed’s inflation target of 2.0%. Keep an eye out for the FED minutes this evening, with the release scheduled for 7PM BST.    

US Inflation has perked up a little after a sustained pullback. Overall both the PCE and CPI suggest that inflation is running at or near the Fed's 2% target. Source: XTB Macrobond 


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