World shares struggled to gain ground on Monday as fading chances for early interest rate cuts globally soured the mood and Chinese markets returned from holiday with only muted gains.
A red-hot U.S. CPI print on Tuesday followed by another upside surprise in producer prices on Friday gave investors concern on persistent inflation, augmented by a weaker retail sales report, suggesting slower economic momentum. However, U.S. labor market numbers have continued to show jobs churning out at a strong clip and elevated wage growth.
Bruce Kasman, global head of economics at JPMorgan, warned the Federal Reserve’s favored measure of core personal consumption inflation could now jump by 0.5% in January. Only a week ago, markets were hoping for a rise of just 0.2%.
The market sea change on rates saw two-year Treasury yields spike to a new 2024 high of 4.72% on Friday before steadying at 4.65%. Treasury futures were little changed on Monday with the cash market closed.
Higher bond yields were underpinning the dollar at 149.95 yen, though the threat of Bank of Japan intervention to prop up the yen has so far capped the currency pair at 150.88.
Oil prices were softer as concerns about demand tussled with the threat of supply disruptions in the Middle East. Brent slipped 76 cents to $82.71 a barrel, while U.S. crude for April fell 51 cents to $78.91 per barrel.
(Reporting by Nell Mackenzie and Wayne Cole; Editing by Dhara Ranasinghe, Sam Holmes, Shri Navaratnam and Susan Fenton)
