Markets in a minute 19th March 2024

Over the past week, the S&P 500 and the Euro Stoxx 50 both rose by 0.5%. Equity markets were supported by continued positive sentiment around tech stocks.

February US retail sales rose by 0.6% m/m, below market expectations of a 0.8% increase and only partially reversed the downwardly revised 1.1% fall in January. Core retail sales, which is used to calculate GDP, was flat against projections of a 0.4% rise. This was suggestive of a softer household consumption backdrop.

Eurozone industrial production excluding construction fell by 3.2% m/m, below market expectations and dragged lower by declines in Ireland and Italy. Excluding these two countries, the measure was flat.

US consumer-price inflation was 3.2% y/y (headline) and 3.8% (core) in February, with both slightly above consensus expectations. However, the breakdown was indicative of disinflationary forces as non-housing services inflation and owners' equivalent rent both decelerated from January. This suggests that the price data in January may not have implied a reacceleration of inflationary pressures but instead was likely driven by start of year repricing.

Bond yields rose (bond prices fall as bond yields rise) last week as central bank commentary from the Fed was somewhat hawkish, suggesting that the first rate cut may be pushed out beyond June. The US Treasury 10-year yield was up by 23bps to 4.31%, while that for the equivalent German bund rose by 18bps to 2.44%.

Elsewhere, the Bank of Japan overnight ended its negative interest rate policy, which it started in 2016. It raised the policy rate from -0.1% to a range of 0-0.1%. This was the first rate rise since 2007 and is indicative of economic change in the country. For more on Japan, please see our Market Explainer from February in the link below.

This week, focus is likely to be on the Fed meeting (Wednesday). No policy changes are expected, but the updated inflation, interest rate and growth projections as well as comments from Fed Chair Powell at the post-meeting press conference are set to be of note in relation to the timing of monetary easing. Elsewhere, global PMIs (Thursday) should give a broad picture of economic conditions.