Today's Update 03-12-2025
Key Points and Metrics
Key Points and Metrics:
U.S. Inflation Data:
Consumer Price Index (CPI) Year-over-Year (YoY):
Actual: 2.8%
Forecast: 2.9%
Previous: 3.0%
Core CPI YoY (excluding food and energy):
Actual: 3.1%
Forecast: 3.2%
Previous: 3.3%
CPI Month-over-Month (MoM):
Actual: 0.2%
Forecast: 0.3%
Previous: 0.5%
Core CPI MoM:
Actual: 0.2%
Forecast: 0.3%
Previous: 0.4%
Interpretation: Inflation rates came in lower than expected, indicating a potential slowdown in price increases.
Market Reactions:
Stock Futures:
S&P 500 Futures: Up 0.4%
Nasdaq 100 Futures: Up 0.7%
Impact: Positive sentiment in the stock market following the inflation data.
Currency Markets:
U.S. Dollar Index: Weakened due to lower inflation, which may reduce pressure on the Federal Reserve to raise interest rates aggressively.
Bond Yields:
Effective Federal Funds Rate: Steady at 4.33% on March 11.
U.S. 10-Year Treasury Yield: Previously at 4.632%.
Impact: Bond yields weakened as lower inflation reduces expectations for rate hikes.
Energy Sector:
EIA Crude Oil Inventories:
Previous: Increase of 3.614 million barrels.
Upcoming Report: Anticipated data could impact oil prices.
OPEC Monthly Report Highlights:
Crude Output: Averaged 41.01 million barrels per day in February, an increase of 363,000 barrels per day from January.
Leading Producer: Kazakhstan led the output increase.
Global Oil Demand Forecasts: Left unchanged for 2025 and 2026, expecting growth of 1.45 million barrels per day and 1.43 million barrels per day, respectively.
Trade Developments:
U.S. Tariff Announcements:
Commerce Secretary Lutnick:
Plans to add tariffs on copper imports.
Reiterated that auto tariffs are coming on April 2.
Stated that nothing will stop tariffs on steel and aluminum imports until the U.S. industry is strong.
International Responses:
Canada:
Announced plans to impose C$29.8 billion in retaliatory tariffs on the U.S. in response to steel and aluminum tariffs.
European Union:
Leaders expressed a desire to avoid an escalation of trade barriers.
German Chancellor Scholz criticized U.S. customs policy, advocating for fewer trade barriers.
Geopolitical Updates:
Ukraine and Russia:
Ukrainian President Zelenskiy:
Expressed readiness to sign a framework minerals deal with the U.S.
Mentioned a 30-day ceasefire to draft a peace plan.
U.S. Secretary of State Rubio:
Anticipates contact with Russian officials.
Urged Russia to end hostilities and expressed hope for a positive response.
Russia:
Reaction to ceasefire proposal is not yet known.
Kremlin stated the need to hear from U.S. officials before commenting.
Other Economic Indicators:
U.S. MBA Mortgage Data:
30-Year Mortgage Rate: Decreased to 6.67% from 6.73%.
Mortgage Applications: Increased by 11.2%, following a previous rise of 20.4%.
German 10-Year Bund Auction:
Average Yield: Rose to 2.92% from the previous 2.52%.
Bid-to-Cover Ratio: 2.1, indicating investor demand.
FINAL THOUGHTS
Today's cooler-than-expected inflation data provides relief to markets that have been under pressure from escalating trade tensions. The CPI report showing both headline and core inflation coming in below forecasts strengthens the case for Fed rate cuts later this year, though next week's meeting is still expected to hold rates steady.
Trade tensions remain a significant risk factor, with Canada preparing nearly $30 billion in retaliatory tariffs and Commerce Secretary Lutnick confirming plans for auto tariffs in April. However, markets appear to be finding some optimism in potential diplomatic progress on Ukraine and the possibility that inflation's downward trajectory might give the Fed more flexibility to respond to any economic slowdown resulting from trade disputes.
Investors should closely monitor upcoming central bank decisions, particularly today's Bank of Canada announcement, as potential indicators for how monetary policy might evolve in response to cooling inflation amid rising trade barriers.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.
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Harry