There’s nothing markets like more than good news on the inflation front. So, as soon as the data came out at 8:30 am Eastern, equities took off like a rocket. Treasuries, gold and silver did, too, while the dollar tanked.
On the news front...
Inflation was the BIG story today. Economists expected the Consumer Price Index (CPI) would rise 0.3% in March, while the “core” index that excludes food and energy prices would climb 0.4%. Instead, the headline number rose just 0.1%. That helped lower the YOY inflation rate to 5% from 6% in February. The core reading came in right in-line at +0.4% however, causing the YOY core rate to inch up to +5.6% from 5.5% a month earlier.
These numbers caused an immediate “Less Fed” reaction in markets. Or in other words, investors judged them positive enough to price in a less-aggressive policy path from Federal Reserve Chairman Jay Powell and crew.
Just how MUCH money is fleeing the banking system? The biggest U.S. banks will report their numbers soon and analysts expect deposits dropped around $521 billion from a year earlier. If that pans out, it would be the biggest plunge in a decade. Money is pouring into money market funds, which are paying out higher yields than stingier, stodgier institutions.
Investors are also yanking money from stocks amid rising economic and banking sector concerns, according to Bank of America (BAC). The firm said clients dumped $2.3 billion in stock last week. The Gloomy Gus-es at Goldman Sachs (GS) say households will likely sell $750 billion in equities over the course of the year, a big swing from the $1.7 trillion they bought from early 2020 through mid-2022.
Will Ukraine still go forward with its spring counteroffensive? That’s what U.S. and Ukrainian officials are saying despite the leak of sensitive intelligence online. Officials in Washington are still assessing the full impact and nature of the leaked documents, as well as trying to figure out who posted them on the Internet.
