The PPI index rose 2.1% for the 12 months ended in March, the Bureau of Labor Statistics revealed. This is lower than the 2.2% expected in the Bloomberg consensus of economists. However, this is still an increase from a 1.6% annual gain in February, confirming the resilience of inflation. On a monthly basis, the PPI gained 0.2%, well below the 0.6% gain seen in February, and under the forecast of 0.3%. This pushed futures on all three Wall Street indexes higher, moving from red to green.

Let’s go back to yesterday, when the coin fell on the wrong side for the Fed's monetary policy. On the wrong side of inflation, in this case, as US consumer price trends in March went off on a tangent, leaving behind the scenario of a gradual decline. The CPI was slightly above forecast. The difference with what was expected in the consensus may seem minimal, but this is the third time in a row that consumer prices have risen a little more than expected in the US. This complicates matters for the Fed which has fewer and fewer reasons to start easing its monetary policy.

The markets are well aware of this. The yield on 10-year US debt jumped from 4.39% to 4.54%, its highest level since the end of last November. The CME's FedWatch tool, which gives a probability of rate movements based on futures contracts, went from slightly over 50% in favor of a rate cut in June to 18% between yesterday and early this morning. The discrepancy between the story the market was telling itself and reality is such that financiers no longer even believe in a rate cut in July (54.5% probability of rates staying the same). I'll remind you that, as is often the case, the pendulum swings from blissful optimism to deep depression without experiencing the intermediate phases, and that the next few days should bring a more pragmatic reading of things. But in the short term, the dominant narrative is once again "US rates will remain high for longer than expected". Investors now expect only two rate cuts this year, the first of which will take place in September. This is a far cry from what prevailed at the start of the year, which was more along the lines of "seven rate cuts, the first of which in March".

As a result, the oracles who had been proclaiming for some time that they foresaw only two rate cuts, one or none at all, are enjoying this. Bloomberg even sought out Lawrence Summers, Bill Clinton's Treasury Secretary, to tell him that we should "take seriously the possibility that the next rate move will be up rather than down." And knock. Summers still made it clear that this is not the most likely eventuality. Four months ago, such a statement would have triggered a few chuckles. But not today. In fact, the Wall Street Journal headline this morning reads quite explicitly, "Fed Rate Cuts Are Now a Question of 'If', Not 'Just When'."

The evaporation of a Fed rate cut in June has pushed the dollar, while the European Central Bank just deliver its verdict on its own key rates today. No surprise here, it kept its rates unchanged, but the market thinks the ECB will cut rates in June. This is because inflation in the eurozone in March came in weaker than expected, and economic conditions in the region are worse than in the US. Not so long ago, the financial community thought that the ECB would follow in the Fed's footsteps. The opposite may well be true. The key point of today's meeting will be the tone adopted by Christine Lagarde at her presentation conference later today. Investors are expecting fairly neutral semantics, leaving the way open for monetary policy easing in the short term. It's important that the institution's hawks don't manage to regain the upper hand, otherwise doubt could set in, weighing on European markets.

Other inflation statistics are attracting attention this morning. In China, consumer prices rose by 0.1% in March, below expectations (+0.4%). Producer prices fell by -2.8%, as expected. These figures are still not in line with a strong economic recovery, and are bound to cause some disappointment. At the same time, China's central bank reinforced its support for the yuan by fixing the daily reference exchange rate at a level that exceeded estimates.

In other news, the United States warned Israel of the risk of a missile attack by Iran or its allies. Meanwhile, in Washington, Joe Biden received Japanese Prime Minister Fumio Kishida on a state visit, to cement relations between the United States and Japan and create a united bloc against China.

In Asia Pacific this morning, the Nikkei 225 lost -0.3%, Hong Kong -0.2% and Sydney -0.4%. South Korea and India are up modestly. European leading indicators are mostly bearish.

Today's economic highlights:

The ECB’s decision and a conference to present the decision are on the agenda, along with weekly jobless claims and producer prices.

The dollar is worth EUR 0.9312 and GBP 0.7976. The ounce of gold stands at USD 2338. Oil rallies, with North Sea Brent at 90.28 USD a barrel and US light crude WTI at 85.92 USD. The yield on 10-year US debt jumps to 4.54%. Bitcoin trades at USD 70,800.

In corporate news:

  • Vertex Pharmaceuticals announced Wednesday evening the acquisition of Alpine Immune Sciences for approximately $4.9 billion in cash, representing a premium of around 67% to its target's closing price on Tuesday. This transaction will enable Vertex Pharma to strengthen its position in the treatment of kidney diseases. In pre-market trading, Alpine Immune shares jumped 36.1%, while Vertex Pharma lost 2%.
  • Regeneron Pharmaceuticals - On Wednesday, the U.S. Department of Justice filed a complaint against the company, accusing it of misrepresenting the price of Eylea, its treatment for macular degeneration.
  • US Steel - The U.S. Department of Justice has opened a full investigation into Nippon Steel's proposed $14.1 billion takeover of U.S. Steel, Politico reported Wednesday evening, citing two people with direct knowledge of the matter.
  • Blackstone and CVC are among a list of potential bidders for Superstruct Entertainment, a festival organizer in Europe, several sources informed of the matter told Reuters. The group could be valued at up to 1.5 billion pounds, according to two sources.
  • Amazon was ordered in the US on Wednesday to pay $525 million to technology group Kove for infringing its patents in data storage systems with its Amazon Web Services service. Amazon shares down 1% in pre-market trading.
  • Goldman Sachs - Philip Berlinski, CEO of Goldman Sachs Bank USA, is to join the hedge fund Millennium Management, the Financial Times reported on Thursday, citing two sources close to the matter. Several of the bank's top executives have left the group since the beginning of the year.
  • Rent the Runway- up 44% in pre-market trading, as the clothing rental specialist anticipates full-year sales growth of 1% to 6% and free cash flow at breakeven for the full year.
  • GE Aerospace - John Slattery, the engine manufacturer's chief commercial officer, will leave the group in June, but will remain an advisor to the company, CEO Larry Culp announced on Wednesday.
  • Crown Castle - The telecom tower operator has announced the appointment of Steven Moskowitz as CEO, effective this Thursday.

Analyst recommendations:

  • Albemarle Corporation: Berenberg upgrades to buy from hold with a price target raised from USD 130 to USD 160.
  • Devon Energy Corporation: Gerdes Energy Research LLC downgrades to neutral from buy with a price target reduced from USD 60 to USD 59.
  • Marsh & Mclennan Companies: Wells Fargo downgrades to equalweight from overweight with a target price of USD 212.
  • Ppg Industries, Inc.: Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 150 to USD 163.
  • Chipotle Mexican Grill, Inc.: Stifel maintains its buy recommendation and raises the target price from USD 2700 to USD 3270.
  • Cummins Inc.: Bernstein maintains its market perform recommendation and raises the target price from USD 237 to USD 297.
  • Fastenal Company: Jefferies maintains its hold recommendation and raises the target price from USD 60 to USD 74.
  • Interactive Brokers Group, Inc.: Citigroup maintains its buy recommendation and raises the target price from USD 105 to USD 135.
  • Micron Technology, Inc.: Cathay Securities Corp., Taipei maintains a buy recommendation with a price target raised from USD 100 to USD 145.
  • Nvidia Corporation: Raymond James maintains its strong buy recommendation and raises the target price from USD 850 to USD 1100.
  • Paccar, Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 115 to USD 140.
  • Vertiv Holdings Co: JP Morgan maintains its overweight recommendation and raises the target price from USD 65 to USD 95.
  • First Citizens Bancshares, Inc.: Barclays initiates an Equalweight recommendation with a target price of USD 1850.
  • Kenvue Inc.: Bernstein initiates an underperform recommendation with a target price of USD 18.
  • Mastercard, Inc.: TD Cowen initiates a Buy recommendation with a target price of USD 545.
  • Snowflake Inc.: KeyBanc Capital Markets initiates an overweight recommendation with a target price of USD 185.
  • Visa, Inc.: BNP Paribas Exane maintains a neutral recommendation with a price target reduced from USD 270 to USD 268. TD Cowen initiates a Buy recommendation with a target price of USD 320.
  • Airbnb, Inc.: Benchmark Co., LLC initiates a Buy recommendation with a target price of USD 190.
  • Jupiter Fund Management Plc: Barclays downgrades to underweight from equalweight with a price target reduced from GBP 0.88 to GBP 0.85.
  • Kingfisher Plc: HSBC upgrades to buy from hold with a price target raised from GBP 2.35 to GBP 3.05.
  • Liontrust Asset Management Plc: Barclays downgrades to equalweight from overweight with a price target reduced from GBP 10 to GBP 7.60.
  • Marks & Spencer Group Plc: JP Morgan upgrades to overweight from neutral with a price target raised from GBP 2.60 to GBP 3.30.
  • Smiths Group Plc: HSBC upgrades to buy from hold with a price target raised from GBP 18.75 to GBP 20.