US inflation and growth are key to market moves in this current volatile economic environment and that is why the CPI measure is one of the biggest influencers in market direction. US CPI topped 7%, for the first time since 1982, but this was in line with expectations and was already priced in. US Bond Yields have climbed in trade this year, in anticipation, reaching as high as 1.8%, in the 10 year bond yield. The reality of the number left markets nonplussed, with equities steady and saw the US Dollar actually in retreat. The EUR jumped to trade 1.1440, despite EU Industrial Production contracting 1.5%, while the GBP charged up to 1.3700.
Commodity prices continued to build and the weaker reserve allowed the associated currencies to rebound strongly. The NZD jumped back towards 0.6850, while the AUD spiked back towards 0.7300. These were big gains and reflected the surge in commodity demand, enhanced by the softer reserve currency. German Wholesale Prices jumped 16.1% annually, while Belgium PPI was a massive increase of 31.4%, giving a clue to spiralling input prices. The US PPI number will be released tonight and expected to top 10%, which will unsettle markets, as this feeds directly into the inflation number.
The PPI number will be watched closely, in tonight’s trade, along with GDP growth numbers from the UK and Germany.