The Market News Today: Persistent PCE Inflation Pressures Loom in March

PCE Inflation Likely High, Complicates Fed’s Rate Decisions

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, likely remained high in March, suggesting persistent price pressures. Forecasters anticipate a 2.6% increase over the last 12 months, up from February’s 2.5% rate and exceeding the Fed’s 2% target. Although core inflation, which excludes volatile food and energy prices, is expected to drop slightly to 2.7%, overall inflation trends suggest the Fed might maintain higher interest rates to combat inflation. March’s data is crucial as earlier quarters have consistently exceeded expectations, hinting at potential rate adjustments.

Tech Earnings Are Surging, Boosting Major Market Indices

S&P 500 and Nasdaq 100 futures are rallying on Friday, driven by strong earnings from tech giants Alphabet and Microsoft. Alphabet shares are soaring 11% after exceeding first-quarter expectations and announcing its first dividend along with a $70 billion buyback. Microsoft shares are also climbing 4% following better-than-expected fiscal third-quarter results. These gains are set to offset recent market losses, despite economic concerns over slow growth and rising inflation. Investors are staying focused on upcoming earnings and key inflation data.

Yen Hits 30-Year Low as BOJ Maintains Rates

The yen dropped to its weakest level in three decades against the U.S. dollar following the Bank of Japan’s decision to hold interest rates at 0-0.1%. The currency weakened by 0.74% to 156.82 per dollar, marking its lowest point since 1990. The yen also reached near-record lows against the euro and Australian dollar. Despite slight adjustments in Japan’s inflation forecast and no imminent signs of interest rate hikes, the widening interest rate differential with the U.S. fuels speculation about potential market interventions by Japanese officials, particularly if upcoming U.S. inflation data escalates the dollar further.

Gold Set for Weekly Drop Amid Eased Crisis Fears

Gold prices remained relatively unchanged on Friday, awaiting a crucial U.S. inflation report. Despite a slight increase in spot gold and U.S. gold futures, prices are down 2.3% for the week, marking the largest weekly decline since December. This drop follows the de-escalation of a Middle East crisis, which had previously driven prices to record highs. Investors now focus on the upcoming U.S. core PCE index data, which could influence Federal Reserve rate decisions and gold’s appeal.

Oil Prices Poised to End Losing Streak This Week

Oil prices are rising on Friday, poised to conclude the week on a high note after two consecutive weeks of declines. This uptick follows positive remarks from U.S. Treasury Secretary Janet Yellen, who expressed optimism about economic growth and anticipated easing inflation. Both Brent and West Texas Intermediate crude futures saw increases of about 0.5%. The boost in prices is further supported by persistent supply concerns amid ongoing conflicts in the Middle East.