- As traders weighed the latest corporate earnings reports against the backdrop of yet another high inflation print from one of the world's major nations, European equities and American equity futures fell and bond yields rose.
- The STOXX Europe 600 index fell 0.3%, with the technology sector leading the way. Futures on the rate-sensitive NASDAQ 100 fell nearly 0.7%, while those on the S&P 500 declined 0.5%.
- The UK 2-Yr yield increased by as much as 15 basis points, and the country's stock index underperformed, as data indicated that inflation exceeded expectations in March, causing traders to increase bets on more Bank of England interest-rate hikes. The 10-Yr Treasury yield increased by 4 basis points. The dollar index rose.
- Investors are watching earnings reports for evidence of how central banks' efforts to contain inflation are harming economic activity in the face of continued hawkish language from policymakers. Thus far, the results of big US lenders have been mixed: Goldman Sachs failed to capitalise on Wall Street's fixed-income boom, leading to firmwide revenue that fell short of expectations. Bank of America exceeded profit forecasts.
- Traders raise bets on peak BoE rate by 14bps to 5% after CPI.
- UK financial markets show a 95% probability of a May BoE rate hike (vs 80% on Tuesday) - Data.
- UK interest rate swaps fully price in the BoE bank rate reaching 5% by November.
- Morgan Stanley now expects the BoE to deliver a 25bps hike in May vs no hike expected earlier.
