US inflation fell to 2.4% in the year to January (or 2.8% for the core measure), boosting hopes for rates cuts later in the year. The PCE measure is the Fed’s preferred gauge of inflation. The reading was the lowest for three years and is down from a peak of 7.1% in June 2022. US equity markets moved high following the data: S&P 500 (+0.5%), Nasdaq (+0.9%). The 10-year Treasury yield slipped to 4.27%. Pimco warned that US fiscal profligacy threatens to drag the Treasury market “back to the future.” In the 1980s, bond vigilantes demanded far higher compensation for longer-dated bonds. Gold moved up to $2,044 an ounce.
This morning, the Nikkei 225 climbed to an intraday record (+1.9%), leading Asia stocks higher: Hang Seng (+0.5%); Shanghai Composite (+0.4%). The yen weakened on Kazuo Ueda’s comments. China’s manufacturing PMI came in at 49.1 in February, shrinking for a fifth month as weak demand hampered growth. However, the widely followed Caixin manufacturing index reached 50.9, slightly better than expected, while the non-manufacturing index rose to 51.4, also above the 50 growth level.
According to Nationwide, UK house prices rose more than expected in February, posting their first annual increase in more than a year. Prices were 1.2% higher, taking the average to £260,420. Sterling trades at $1.2633 and €1.1680. The FTSE 100 is currently trading 0.6% higher at 7,675.
Brent trades at $82 a barrel. US crude consumption surged to a four-year high last year and may edge up further by 160,000 barrels a day to 20.4m b/d in 2024, according to the EIA.
