Tuesday's Market Minute: Inflation, Yields, And Earnings

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March’s highly anticipated Consumer Price Index (CPI) report shows an 8.5% annual increase, which is the highest level since December 1981. The largest increases continue to be within the prices of shelter, food, and gasoline as agricultural and energy commodity prices continue to surge in the wake of the Russian invasion of Ukraine.

While crude oil has fallen from multi-year highs made in early March, the price remains elevated at levels previously seen in the summer of 2014. Corn futures (/ZC) are trading at levels not seen in nearly a decade. The inflation story continues tomorrow with the producer’s side of things. Analysts expect March’s Producer Price Index (PPI) will show a 1.1% monthly increase and a 10.6% annual increase. 

Treasuries are on the rise. The 10-year treasury yield traded above 2.8% overnight, which hasn’t been seen since December 2018, well before the COVID-19 pandemic. The rise comes as the Federal Reserve braces for tighter monetary policy ahead. Following March’s rate hike, investors expect another 50bps increase in May.

The rise in rates is adding to existing pressures on riskier assets like tech stocks, which led losses on Monday. The tech-heavy Nasdaq-100 (NDX) fell 2.4%, compared to the 1.7% drop in the S&P 500 (SPX) and 1.2% loss from the Dow Industrials ($DJI). Shares of Microsoft (MSFT) declined 3.9%, while semiconductor stocks like Nvidia (NVDA) and Advanced Micro Devices (AMD) fell 5.2% and 3.6%, respectively. 

Earnings are also on the docket this week as the unofficial start to another earnings season begins Wednesday when Delta Air Lines DAL and JPMorgan Chase JPM both report 1Q results, followed Thursday by several big banks including Morgan Stanley MS, Citigroup C, and Goldman Sachs GS.

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This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.