Headlines:
- Eurozone February preliminary CPI +8.5% vs +8.2% y/y expected
- 10-year Treasury yields push above 4%
- Make or break moment for stocks this week
- ECB's Lagarde: Price decline is not stable
- ECB's Lagarde: We still have to pursue higher rates, don't know the peak yet
- ECB accounts: Reservations were expressed on proposed communication of intention for March
- China reportedly may look to target 6% mark with 2023 growth forecast
Markets:
- USD leads, NZD lags on the day
- European equities lower; S&P 500 futures down 0.4%
- US 10-year yields up 4.6 bps to 4.042%
- Gold down 0.2% to $1,832.53
- WTI crude up 0.4% to $78.01
- Bitcoin down 0.9% to $23,350
All eyes are on the bond market as a trip above the 4% mark for 10-year Treasury yields (and now 30-year Treasury yields for a brief moment - the first time since November) is keeping the dollar more bid on the day.
It is a case of markets coming around to the idea of stickier inflation and more aggressive central banks, with another record core inflation reading in the euro area in February contributing to that narrative.
Equities are pushed lower even though European stocks are still showing a bit of fight but on the balance of things, we are seeing a more defensive risk mood and that is underpinning the dollar today.
EUR/USD gradually moved lower from 1.0650 to 1.0605, down at the lows for the day now, while GBP/USD fell from 1.2000 to 1.1945 on the session with the pound losing 0.7% against the dollar.
USD/JPY is knocking on the door of its key daily moving averages, holding at 136.70 now - up 0.4% on the day. Meanwhile, the antipodeans are struggling with AUD/USD down 0.5% to 0.6725 and NZD/USD down 0.7% to 0.6220 at the moment.
It's all about inflation and central banks once again, now that we're starting to gear towards the key events coming up in the weeks ahead. And for now, the bond market is having its say and it is reverberating elsewhere.
