Bonds & Stocks
A stellar quarter for stocks is ending with a sense of caution, with traders gearing up for key inflation data after the latest Fedspeak reinforced bets policymakers will be in no rush to cut interest rates. The relentless rally that added $4 trillion to US equity values this year hit a wall after Federal Reserve Governor Christopher Waller said he wants to see “at least a couple months of better inflation data” before cutting rates. Not even solid economic readings were able to move the needle ahead of the release of the Fed’s preferred inflation gauge and Jerome Powell’s remarks Friday — when markets will be closed. he S&P 500 wavered around 5,250 after closing at a record. Treasury two-year yields rose five basis points to 4.61%. The bond market will close at 2 p.m. New York time Thursday.
Economy
US consumer sentiment rose markedly toward the end of March, supported by strong stock-market gains and expectations that inflation will continue to ease.
The University of Michigan’s sentiment index climbed to 79.4 from 76.5 earlier in the month, reaching the highest since mid-2021, according to the final March reading issued Thursday. The 2.9-point gain from the preliminary reading was the biggest intramonth increase since August 2022.
World
Japan had its toughest warning yet for traders on its willingness to intervene in currency markets after the yen slid to its weakest level in about 34 years against the dollar. The nation’s currency dipped to 151.97 versus the greenback early on Wednesday in Tokyo — beyond the level at which policymakers stepped in during October 2022 — before comments from government officials on their readiness to act boosted the yen to its strongest level of the day. “We are watching market moves with a high sense of urgency,” Finance Minister Shunichi Suzuki said. “We will take bold measures against excessive moves without ruling out any options.” Suzuki’s reference to bold action is generally interpreted to mean direct intervention in the currency market.