Inflation and Interest Rates in Focus Today

US Consumer Prices for February came in better than expected (2.8% vs street 2.9% and previous 3.0%), and stocks are rallying on the news. This sign of benign inflation, even amid all the recent trade war and tariff turmoil, may be taken as a sign by investors that the Fed is not under pressure to raise interest rates and may have scope to resume interest rate cuts. The US 10-year treasury note yield is steady near 4.30%.  

The Bank of Canada releases it’s latest interest rate decision at 9:45 am EDT followed by the press conference at 10:30 am. A 0.25% cut of the overnight rate to 2.75% is widely expected. Investors may look to the accompanying statement for commentary on inflation plus the health of and risks facing the Canadian economy in the current environment. The Loonie is up 0.3% ahead of the decision.

The positive inflation numbers are helping US index futures to rally 1.0% to 1.7%, clawing back all of yesterday’s 0.2% to 1.0% US index losses and eating into previous retreats. In Europe today, the Dax is up 1.6% and the FTSE is up 0.6%. Copper is up big with a 2.2% gain. Energy trading is mixed with Crude Oil up 1.5% and Natural Gas down 3.5%.  Gold is up 0.1%, while Silver is up 1.5%.

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