Market Overview by Alan McIntosh, Chief Investment Strategist at Quilter Cheviot
Inflation once more dominated the narrative for markets last week, with CPI data releases from both the US and UK hitting new highs. The latest readings, covering the month of March, showed US consumer price growth surpassing 8%, the highest level since 1981, and the UK equivalent increasing to a 30-year peak of 7%. While both prints topped consensus forecasts, the core figure for the US was lower than expected, providing a short-term rally in Treasuries and equities, though this petered out in due course.
Elevated price pressures continue to dominate central bank communications, though there were no fireworks from the latest ECB monetary policy decision, with the Governing Council continuing to stick to its gradual timetable for removing stimulus. ECB president Christine Lagarde noted additional inflationary pressure from the war in Ukraine and the harder hit imparted on the eurozone economy compared to other regions but failed to be drawn on specifics regarding rate hikes or the end of asset purchases. Markets are pricing in an increase in the ECB’s deposit rate back above zero by year-end and see almost 1.5% by the end of 2023…
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