NY Open – US looks less exceptional now
Risk sentiment holds well ahead of US data. After a rise in jobless claims, we turn to Michigan sentiment and Fedspeak to gauge the state of play into CPI. US Treasuries traded flat overnight, allowing equities to make modest gains and high beta currencies to outperform. Bloomberg reports Biden will announce tariffs on Chinese EVs as a result of the Section 301 tariff review, which is somewhat expected. Overnight data showed the UK economy exiting recession, and strong Norway CPI.
Five FOMC speakers are scheduled today, with Logan at 10:00 EDT of particular interest. University of Michigan sentiment is expected to drop, while our economist warns 1y inflation expectations could rise to 3.4%. Citi Economics is slightly below consensus for Canadian unemployment and hourly wages due at 08:30. Latam looks to Brazil’s IPCA inflation, while CPI and central bank decisions are in focus across EM. ECB minutes and BoE speakers are also scheduled.
COP –Today, COP moved slightly lower amid a mixed LatAm complex and an overall weaker USD. Our trader has noted local corps selling USDCOP while real money were better buyers today, though he saw an overall quiet session. Headline CPI came in yesterday in line with consensus and core slightly below consensus. The print stood right in line with our call, and just above consensus per BBG and our expectations survey at 0.58% MoM. The reading brought annual headline down to 7.16% YoY from 7.36% in March, consolidating a 13-month long downtrend. The core component posted a 0.46% MoM rise (below BBG consensus at 0.53%) bringing the annual print to 8.19 % YoY, down from 8.76% YoY. April CPI should allow Banrep to continue easing, and possibly allow an acceleration to 75bps in the June meeting, when the CB will have an additional month worth of inflation data. We have not seen strong outright interest from clients and expect the currency to continue to trade between 3870 and 3950.