A gauge of global equities has slipped while Treasury yields edged higher as investors sought clues on the potential for Federal Reserve interest rate cuts in the latest inflation data while the European Central Bank signalled rate cuts soon.

A day after March’s hot Consumer Price Index (CPI) reading sent equity investors to the exits, Thursday’s data showed US producer prices rose moderately last month with a cost of services increase blunted by falling goods prices. 

The producer price index (PPI) for final demand rose 0.2 per cent versus economist expectations for 0.3 per cent and a February increase of 0.6 per cent.

But New York’s Fed President John Williams said on Thursday that while the US central bank has made considerable progress with inflation, it does not appear to need rate cuts yet. 

Richmond Fed President Thomas Barkin said the Fed is not yet where it wants to be to have confidence that price pressure will keep easing.

“(Thursday) morning’s PPI report came in softer than expected, lessening the blow of the disappointing CPI report (on Wednesday), which obviously shows that progress on disinflation is stalling,” said Emily Roland, co-chief investment strategist at John Hancock Investment.

But while noting that the Fed will have two more months of data to look at before it makes a rate decision in June, Roland said that “markets are getting the memo that the Fed is likely not going to be able to cut anytime soon” and that “it’s tough to see the case to cut rates”.

On Thursday, traders were betting on a 79 per cent chance that the Fed will keep rates unchanged in June, slightly lower than Wednesday and a 49.7 per cent chance they will stay the same in July compared with 57.6 per cent on Wednesday, according to CME Group’s FedWatch tool.

MSCI’s gauge of stocks across the globe fell 0.78 points, or 0.10 per cent, to 772.00. 

The STOXX 600 index fell 0.44 per cent.

US Treasuries yields were mixed after the PPI data, with two-year yields hitting 5.0 per cent for the first time since November and 10-year yields also touching their highest point since November after falling earlier.

The yield on benchmark US 10-year notes rose 1.2 basis points to 4.572 per cent, from 4.56 per cent late on Wednesday, while the 30-year bond yield rose 3.1 basis points to 4.6651 per cent from 4.634 per cent.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 2.3 basis points to 4.946 per cent, from 4.969 per cent late on Wednesday.

In currencies, trading was choppy with the greenback last rising against a basket of major currencies after falling earlier following the lower-than-expected PPI data.

The US dollar index gained 0.15 per cent at 105.36, with the euro down 0.2 per cent at $US1.0719. 

Against the Japanese yen, the US dollar strengthened 0.01 per cent at 153.2.

Oil prices fell following a major US refinery outage and investor digestion of inflation data while worries that Iran might attack Israeli interests kept crude near six-month highs.

US crude lost 0.92 per cent to $US85.41 a barrel and Brent fell to $US89.94 per barrel, down 0.59 per cent on the day.

Gold prices firmed after the inflation data while persistent geopolitical concerns added to the metal’s shine.

Spot gold added 0.5 per cent to $US2,344.39 an ounce.

US gold futures gained 0.3 per cent to $US2,336.70 an ounce.

This post was originally published on Michael West.