Sticky U.S. Inflation Data Pauses Rate Cut Bets, Global Bonds Retreat

U.S. inflation data for April triggered significant volatility across global markets, with sticky core consumer prices leading to surging Treasury yields, weakened rate-cut expectations, and a broad selloff in equities and risk assets. As traders reassess monetary policy outlooks, markets from the U.S. to emerging economies are reacting swiftly.

🌍 Market Summary

Markets sold off after April’s U.S. inflation data confirmed persistent core price pressures. The CPI release pushed Treasury yields higher, diminished Fed rate-cut expectations, and drove outflows from equities and emerging market assets. The dollar gained ground, while energy prices rose modestly due to geopolitical risks.

🇺🇸 United States

Key Events (May 14):

• CPI (YoY): 3.4% (in line)
• Core CPI (YoY): 3.6% (above est. 3.5%)
• Core CPI (MoM): 0.3% (as expected)

Market Performance:

• S&P 500: -0.48%
• Nasdaq 100: -0.78%
• Dow Jones: -0.21%
• 10Y Treasury Yield: ↑ 6bps to 4.48%
• USD Index (DXY): ↑ 0.5%

Highlights:
Sticky inflation for the third straight month led to a decline in Fed rate-cut bets. Traders now expect only one 25 bps cut in 2025. Fed’s Kashkari emphasized the need for more data before easing.

🇪🇺 Euro Area

Market Performance:

• STOXX 600: -0.60%
• German 10Y Bund Yield: ↑ 5bps to 2.52%
• EUR/USD: ↓ 0.4% to 1.080

Headlines:
German CPI confirmed at 2.2% YoY. ECB’s de Guindos signaled a likely June rate cut. Industrial production missed expectations.

🇬🇧 United Kingdom

Market Performance:

• FTSE 100: -0.26%
• GBP/USD: ↓ 0.6% to 1.252
• 10Y Gilt Yield: ↑ 5bps to 4.20%

Highlights:
Sticky U.S. inflation data influenced U.K. markets, leading traders to push back BoE cut expectations to September.

🇯🇵 Japan

Market Performance:

• Nikkei 225: +0.46%
• USD/JPY: ↑ 0.8% to 156.78
• 10Y JGB Yield: ↑ 3bps to 0.91%

News:
The yen weakened amid rising U.S. yields. Japan’s PPI rose 0.9% YoY. Authorities stayed silent on FX intervention.

🇨🇳 China

Market Performance:

• CSI 300: -0.44%
• Hang Seng: -0.83%
• CNH: ↓ 0.3% vs USD

Developments:
With no major data releases, traders look ahead to Friday’s industrial and retail data. Tech stocks dragged indices lower.

🌍 EMEA & Emerging Markets

🇹🇷 Turkey:

• USD/TRY: Flat at 32.28
• BIST 100: +0.2%
• FX-protected deposit share dropped to 18.8%, signaling confidence in TRY.

🇿🇦 South Africa:

• ZAR: ↓ 0.7%
• Inflation expectations rose ahead of SARB meeting.

🇧🇷 Brazil:

• IBOVESPA: -0.9%
• BRL: ↓ 0.6%
• Political tension and global yield shifts pressured assets.

🛢 Commodities

• WTI Crude: ↑ 1.3% to $79.20
• Brent: ↑ 1.1% to $83.40
• Gold: ↓ 0.7% to $2,340
• Silver: ↓ 1.2% to $28.12

News:
Oil rebounded amid rising Middle East tensions. Gold declined as real yields jumped following the CPI release.