Daily Market Update - Apr 13

US inflation data overnight made multi-decade highs as expected and Brainard's comments soon after called for decisive rate hikes and starting the balance sheet runoff as soon as June, after the proposed USD 95 bn a month plan is approved in May. The effect was a little surprising though as the yield curve managed to shed all inversions - except for the 20Y, which is more for technical reasons. The 3M, 2Y, 5Y, 10Y and 30Y are in an upward sloping trajectory now, indicative of positive economic sentiment and reduced stress in the system. The 10Y fell back a little to the 2.75% mark.

Equities were lower again as SPX tested the 4.4k support level. Despite three growth warnings from the Chinese Premier this week owing to Covid 19 restrictions in Shanghai, equities were up in the Mainland and HK.

The US dollar stayed positive and WTI rose to trade above the 100 level once again. Bitcoin is still holding onto the 40k support as bids appear to be coming in there.?Broad commodities rose on the day too.

Putin said that peace talks with Ukraine were a dead end and expectations of a renewed offensive in the Donbas region are increasing. Macron thinks Putin is looking for a victory before Russia celebrates its WW2 victory on May 9.

Sri Lanka has halted all external debt payments (amounting to default) as FX reserves of USD 2 bn were being saved for importing essentials. Emergency talks with the IMF are scheduled to start on Apr 18 here.

RBNZ hiked by 50 bps as expected today and BoC is expected to hike by 25 bp later in the day. We also have the US weekly crude inventories later today.

Have a great day ahead.

Activity is the enemy of investment returns – Warren Buffett