Marketwatch North America

Daily Insights
April 25, 2024

Today’s U.S. economic data encapsulates the Fed’s plight with resurgent inflation now clearly undermining the U.S. economy. First quarter GDP was 1.6%, below both the 2.5% estimate and last year’s Q4 3.4%.  Consistent with lower GDP, Personal Consumption (also Q1) was 2.5%, below the 3.0% estimate and 3.3% previous. The Q1 GDP Price Index was 3.1%, above a 3.0% estimate and significantly above Q4’s 1.6%. And finally, the Q1 Core PCE Price Index increased to 3.7% compared to the 3.4% estimate and Q4’s 2.0%. Higher inflation is driving soft real consumption.

The U.S. dollar is sharply higher following the Q1 data which lifted the dollar index from a loss of 0.33% to a 0.13% gain. The dollar is higher vs. most G10 currencies but significantly higher against emerging market pairs: +1.12% vs. MXN, +0.42% vs. BRL.

The USD/MXN is now +6.29% from April’s low and had been +10.14% just last Friday on initial reports that Israel had launched a retaliatory strike on Iran. In times of economic and global crisis traders are more frequently resorting to buying dollars against the peso.

U.S. Treasury yields are sharply higher (surprising no one) following the Q1 data. The biggest gains are in the near tenors, 3y-8yr +0.087%. The benchmark 10-year yield is +0.083% at 4.7258%, its highest since November of last year.

Fed Funds futures now imply the probability of only 1 ½ quarter point rate cuts this year, distant from January’s implied seven quarter point cuts by December.

Fewer rate cuts (and the discussion shifting to rate hikes) means businesses and consumers will be paying higher borrowing costs, the Achilles heel of equities. Global equity indexes are sharply lower with U.S. indexes bearing the brunt of the selloff: S&P 500 -1.48% and Nasdaq 100 -1.71%.

Economic Calendar

USD - Advance GDP q/q
EUR - German GfK Consumer Climate
USD - Unemployment Claims
EUR - Italian Bank Holiday
USD - Advance GDP Price Index q/q
EUR - ECB Economic Bulletin
USD - Goods Trade Balance
GBP - CBI Realized Sales
USD - Prelim Wholesale Inventories m/m
USD - Pending Home Sales m/m
USD - Natural Gas Storage
JPY - Tokyo Core CPI y/y
EUR - German Buba President Nagel Speaks
GBP - GfK Consumer Confidence

Market Indicators

Currency Pairs
Pair High Low
usd/jpy 155.746 155.241
eur/usd 1.07398 1.06781
gbp/usd 1.25255 1.24541
aud/usd 0.65387 0.64852
usd/cad 1.3731 1.36646
eur/gbp 0.8592 0.85645
usd/mxn 17.3889 17.0071
Equities and Commodities
S&P 500 5006.26
NASDAQ 17224.9
DOW 38012.2
GOLD 2313.49
SILVER 27.15

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.