Analysts at brokerage FP Markets have informed their clients about the most important event the markets are expecting today.
On Wednesday, at 13:30 GMT, the US CPI report for March will be released, which will be the main event of the week.
According to FP Markets, traders and investors will be watching the CPI closely, as it is the indicator that the Federal Reserve will use to assess the health of the US economy and decide whether or not to lower interest rates.
According to Bloomberg forecasts, the overall Consumer Price Index (CPI) will rise in March on the back of rising energy prices.
Bloomberg experts predict that the CPI will increase at an annualized rate of 3.4% in March, up from 3.2% in February (estimated range: high 3.5%, low 3.1%).
On a monthly basis, inflation will rise 0.3% from 0.4% in February (estimated range: high 0.5%; low 0.2%).
Headline and core inflation are expected to remain in the low single digits. The Fed's decision will focus on inflationary pressures.
Fed Chairman Jerome Powell noted that the Fed is unlikely to cut rates in the near term until it gains confidence in the inflation picture. At the same time, however, "it will be appropriate to lower rates at some point this year." Powell emphasized that recent economic data "do not significantly change the overall picture," but it is important to assess whether the recent acceleration in inflation is just a temporary "blip."
Other Fed officials are considering the scenario that the Fed will not cut rates at all this year. Minneapolis Fed President Neel Kashkari recently said, "If we continue to see strong job growth, strong consumer spending, and strong GDP growth, then the question becomes, why would we cut rates?"
The general consensus among pundits on all of the Fed's statements in recent weeks is that the regulator is in no hurry to cut rates, which has ultimately caused UST yields to rise and investors to increase their bets that rates will remain elevated for longer.
Heading into this event, the swaps market is pricing in a rate cut of just -63 bps year-over-year, a significant departure from earlier in the year when the market was ambitiously pricing in a cut of around -150 bps. The possibility of an initial 25 bps cut at the June meeting remains (-13 bps).
See also: Dollar freezes in anticipation of US inflation data
