Fundamentals: Yesterday, the U.S. PPI unexpectedly hit the lowest year-on-year growth rate in more than two years in April. After the PPI was announced, the two-year U.S. bond yield fell 10 basis points during the session, and the U.S. dollar index rebounded to a one-week high. Earnings reports and worries about regional banks hit U.S. stocks, with Disney down nearly 9%, leading the decline in the Dow and S&P constituents. Sterling retreated against the dollar after the Bank of England raised interest rates, staying away from one-year highs, while silver fell nearly 5%.
The PPI in the United States increased by 2.3% year-on-year in April, which was lower than the expected 2.5% and the previous value of 2.7%, hitting a new low since January 2021. MoM growth rose 0.2% MoM in April after an unexpected 0.5% decline in March. In April, the core PPI increased by 3.2% year-on-year, which was lower than the expected 3.3% and the previous value of 3.4%. The month-on-month growth rate was 0.2%, which was in line with expectations and was up from the previous value of -0.1% (0% after revision). The analysis believes that the year-on-year growth rate of the overall and core PPI is lower than expected and the previous value. Superimposed on yesterday's CPI hit the smallest increase in two years, the Fed has more reason to take a moment to breathe.
The Bank of England raised interest rates by 25 basis points yesterday as expected by the market. At the same time, it is expected that domestic inflation will fall less than previously expected, and it has raised its economic growth forecast. It is not expected to fall into recession. Governor Bailey said that the Bank of England will stick to the end to ensure that inflation returns to the target level. Sterling retreated to a one-week low against the dollar, away from a more than one-year high set on Wednesday, fueling the dollar's rally as expectations for the Bank of England to keep tightening rose.