USA: inflation at 3.5%, above expectations. Investors reduce bets on US rate cuts

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US inflation rose to 3.5% in March, beating expectations and marking the second consecutive increase.

Home, medical services and egg prices continue to rise in the United States in March, while toy prices decline. The analysis of inflation data shows how prices accelerated especially in the southern United States, where they rose by 3.8% with peaks of 4.9% in Dallas following the rapid increase in population. The housing item continues to increase: in March it recorded a +0.4% on February and a +5.7% on the same period of 2023. Shopping cart inflation remained almost unchanged but egg prices rose in one month by 4.6%.

The reaction of the markets

European stock markets suddenly erase their gains after the US inflation data which increasingly distances the hypothesis that the Fed could reduce the cost of money in June. On Piazza Affari, the Ftse Mib stood at parity, while it gained 0.7% before the US price index was released. Madrid goes “red” at -0.1% (from +0.4%), while Paris is flat (from +0.5%) and Frankfurt floats around +0.1%.

Sharp slowdown of the euro against the dollar: the single currency fell to 1.0792 against the greenback (from 1.0863 pre-inflation).

Sales on US government bonds

The two-year Treasury yield, which tends to track expectations about the Fed’s future moves, rose to 4.93% following the release of March consumer price index data. The 10-year Treasury yield is up at 4.488%. Wholesale inflation data will be released tomorrow.