US inflation slows in March

US consumer price inflation came in lower than expected in March, falling 0.1% m/m, after a 0.2% rise in February. This move was the first month-on-month decline in prices in almost 5 years. That left the annual pace of price growth at 2.4%, well below the 2.8% recorded the month prior. Categories that made the most significant contributions to the lower-than-expected inflation print included energy, hotel stays, airfares, used vehicles and vehicle insurance costs. Stripping out volatile food and fuel prices, core CPI printed at 2.8% in March, down from 3.1% in February. Although the latest outturn will come as a relief to policy makers, the risks in future months are tilted towards the upside with tariffs coming into force in April.

US initial jobless claims increased to 223K in the week ending April 5, in line with consensus expectations, and up marginally from 219k the week prior. New claims filed by federal workers cooled slightly over the period, although a rise is expected later in the year as DOGE cuts take effect.

CPI inflation in Egypt ticked up to 13.6% y/y in March, faster than the multi-year low of 12.8% in February but still markedly slower than the average pace of the past three years as FX depreciation has passed through the base. Prices were up 1.6% m/m, slightly faster growth than the 1.4% logged in February. Food & non-alcoholic beverages, the largest sub-component of the CPI basket, saw y/y price growth of 6.6%, up from 3.7% previously. Housing & utilities prices were up 13.0%, marginally faster than the 12.8% logged the previous month, while transport prices were up 34.0% y/y, with both components reflecting fiscal adjustments to subsidies implemented through the second half of 2024.

Industrial production in Saudi Arabia fell 0.2% y/y in February, compared with 1.3% growth the previous month. Production was up 0.7% m/m. The fall was driven by mining and quarrying which was down 0.7% y/y in February as Saudi Arabia reduced its oil production to 8.95mn bbl from 9.01mn bbl in February 2024. Manufacturing production expanded by 0.2% y/y, within which food products production rose by 6.3% and chemicals and chemical products production was up 3.5%, offset in part by a 7.6% fall in basic metals production.

Today’s Economic Data and Events

• 10:00 UK monthly GDP (February). Forecast: 0.1% m/m
• 10:00 UK industrial production (February). Forecast: -2.3% y/y
• 14:30 IN industrial production (February). Forecast: 3.6% y/y
• 16:30 US PPI final demand (March). Forecast: 3.3% y/y
• 18:00 US University of Michigan sentiment survey (April). Forecast: 53.8

Fixed Income

• Moves in US treasury yields were mixed on Thursday, as markets continued to react to President Trump’s tariff-pause. Yield on the 2yr UST fell 5bps, to reach 3.8620%, while the 10yr yield rose 9bps to 4.4246%.
• Yields on major European bonds saw broad-based declines on the day. The 10yr Gilt yield fell 13bps to 4.6466%, while the 10yr Bund yield fell by 1bps to 2.577%.

FX

• The dollar spot index, a measure of the dollar against a basket of major peer currencies, fell sharply on Thursday, declining almost 2%. EURUSD rose by 2.3% to 1.1201, GBPUSD rose 1.7% to 1.297. USDJPY fell 2.2% to 144.45.
• Commodity currencies also strengthened against the dollar on Thursday. AUDUSD rose 1.2% to 0.6224, NZDUSD gained 1.7% to close at 0.5739, and USDCAD fell 0.7% to reach 1.3983.

Equities

• US equity markets fell on Thursday, after having seen a significant rally the day before. Better-than-expected CPI data wasn’t enough to offset continued investor concerns about the economic impact of tariffs. The S&P 500 fell 3.5%. The Dow Jones declined by 2.5% and the NASDAQ dropped 4.31%.
• European equity markets rose on Thursday, on the back of the 90-day tariff pause. The Euro Stoxx 50 rose 4.3%, the CAC40 gained 3.8% and the DAX increased by 4.5%. The FTSE 100 rose 3%.
• The DFM rose 1.7%, the ADX gained 0.87%, and the Tadawul increased by 3.66%.

Commodities

• Oil futures fell once more on Thursday, after having rebounded on Wednesday, as concerns about tariff induced demand reductions weighed on the market. Brent futures fell 3.3% to USD 63.33/b, and WTI declined by 3.7% to USD 60.07/b. The EIA reduced its outlook for global oil demand growth to around 900k barrel a day in 2025, amounting to a roughly 400k reduction from last month’s forecast.