Markets opened the week on a cautious note, driven by U.S. CPI anticipation, which weighed on global risk sentiment and bond markets. With April inflation data set to clarify the Federal Reserve’s policy trajectory, traders adopted a defensive stance. Treasury yields drifted higher, the dollar held firm, and volatility remained muted in equities. Simultaneously, Middle East tensions and renewed Chinese deflationary pressures acted as secondary drags on sentiment.

🇺🇸 U.S. Markets – Caution Prevails on U.S. CPI Anticipation

Defensive positioning dominated equity flows, reflecting heightened U.S. CPI anticipation ahead of Tuesday’s inflation release.

Equity Snapshot (May 13):

• S&P 500: ▼ 0.03%
• Nasdaq 100: ▲ 0.15%
• Dow Jones: ▼ 0.21%

Rates & FX:

• 10Y Treasury Yield: ↑ 3bps to 4.50%
• USD Index (DXY): Flat near 105.2

Key Drivers:

• Markets traded range-bound ahead of Tuesday’s CPI print.
• Core CPI MoM is forecasted at 0.3%, with YoY seen at 3.6%.
• Fed’s Bostic emphasized ongoing disinflation but warned it’s insufficient for a near-term cut.
• Short-term rate cut bets were trimmed further; markets now price in only one 25bps cut in 2025.

Outlook:

• A hotter-than-expected CPI may further dampen rate cut expectations and pressure growth-sensitive sectors.
• Tech outperformed slightly, reflecting positioning for potential macro shocks.

🇪🇺 Eurozone – Inflation in Focus Amid U.S. CPI Anticipation

Markets:

• Euro Stoxx 50: ▼ 0.25%
• German 10Y Yield: ↑ 2bps to 2.49%
• EUR/USD: ▲ 0.08% at 1.078

Notables:

• German April CPI confirmed at +0.4% MoM, broadly in line.
• ECB’s Lane indicated restrictive policy “must continue for a while,” reducing June rate cut hopes.
• Weak industrial production from Italy and mixed earnings capped risk appetite.

Takeaway:
U.S. CPI anticipation influenced eurozone sentiment via yield correlation and FX pressure.

🇬🇧 United Kingdom – Macro Patience Ahead of GDP

Markets:

• FTSE 100: ▼ 0.22%
• GBP/USD: ▲ 0.04% at 1.253
• 10Y Gilt Yield: ↑ 4bps to 4.11%

Drivers:

• Markets remained cautious ahead of Thursday’s Q1 GDP data (expected +0.6% QoQ).
• Real estate and energy sectors underperformed.
• Gilt yields followed U.S. Treasuries higher amid global bond repricing.

View:
Sticky U.S. inflation reduced expectations for a near-term BoE cut. September now priced as base case.

🇨🇳 China – Risk Sentiment Pressured by CPI Anticipation

Markets:

• Shanghai Composite: ▼ 0.21%
• Hang Seng Index: ▼ 0.85%
• CNY/USD: Weaker at 7.235

Highlights:

• April PPI contracted -2.5% YoY; CPI flat.
• Weak price data reignited deflation fears.
• Chinese tech led losses in Hong Kong amid continued policy uncertainty.
• Fiscal support hopes now shift toward May-end Politburo meeting.

Macro Context:
Rising U.S. yields and U.S. CPI anticipation further dampened global appetite for China exposure.

🇯🇵 Japan – Yen Weakness Offers Support to Equities

Markets:

• Nikkei 225: ▲ 0.44%
• USD/JPY: ↑ 0.18% to 156.42
• 10Y JGB Yield: Flat at 0.92%

Developments:

• Japanese equities benefited from weaker yen and improved risk tone during Asia session.
• BOJ Governor Ueda reiterated a cautious approach to policy normalization.
• Japan’s exporters continued to gain from favorable FX tailwinds.

🌍 EMEA Region – Risk Sensitivity Rising

Turkey:

• BIST 100: ▼ 0.74%
• USD/TRY: Flat at 32.34
• CBRT reported FX-protected deposits declined to 18.8%, suggesting a shift toward TRY.

South Africa:

• ZAR: ▼ 0.7% vs USD
• Markets priced in higher inflation expectations ahead of SARB’s upcoming rate decision.

Russia:

• MOEX: ▲ 0.35%

Regional Insight:
Emerging market currencies stayed broadly stable despite U.S. yield pressure. However, U.S. CPI anticipation created a cautious undertone across local bond markets.

🛢 Commodities & Crypto – Real Yields Weigh on Metals

Energy:

• Brent: ▲ 0.15% at $82.95
• WTI: ▲ 0.21% at $78.60
• Oil stabilized as Middle East ceasefire rumors clashed with ongoing supply concerns.

Precious Metals:

• Gold: ▼ 0.12% at $2,343
• Silver: ▼ 0.42% at $32.75
• Real yields climbed post-CPI anticipation, weighing on metals.

Crypto:

• Bitcoin and Ethereum traded mixed as macro caution kept volumes light.
• Market remained on edge ahead of inflation confirmation.

🔍 Final Take

Markets remain laser-focused on April’s U.S. CPI data. A hotter-than-expected print would likely extend the bond sell-off and delay central bank easing across developed markets. Until then, U.S. CPI anticipation will continue to steer global flows, tempering risk sentiment and driving near-term volatility.