Expected inflation to ease to 3.75% by end of year, 2% by 2025. Fed's Mester (FOMC voter) stated that inflation remained too high Reiterated would need to hike rates above 5% and hold them there. Australia Mar Final PMI Services: 48.6 v 48.2 prelim (confirms move back into contraction). Japan Mar Final PMI Services: 55.0 v 54.2 prelim (confirms 6th month of expansion, quickest rate of expansion since October 2013). Reiterated further rate hikes might be needed. RBA Gov Lowe stated that the pause in tightening cycle did not imply the process is complete.
MIXED IN KEY SE FULL
Noted that the full impact of monetary tightening was yet to be fully realized. RBNZ raised the Official Cash rate (OCR) by 50bps to 5.25% (more-than-expected). Asia closed mixed with NZX50 underperforming at -0.3%. Ahead of US Non-Farm Payrolls on Friday, ADP Employment Change later today at 08:15 ET (12:15 GMT).
France Pres Macron and EU Commission Pres Von der Leyen visit Beijing as part of planned state visit. RBNZ delivered a ‘shock and Orr’ 50 bps hike, above 25bps consensus but noted to see a continued slowing in domestic demand and a moderation in core inflation and inflation expectation. Markets continue to speculate that aggressive Fed monetary tightening is nearing an end after a miss in US JOLTS Job Openings yesterday which tanked USD and saw a shift in Fed rate expectations from 60:40 for 25bps hike to 60:40 for a pause. European PMI Services data mixed but remain in expansion territory (Beats: UK, Italy, Spain Misses: France, Germany, Euro Zone) In general, firm readings knocking growth fears away.
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