The Federal Reserve's preferred measure of inflation, the personal consumption expenditures (PCE) core deflator, advanced by 0.169% in March. Markets had been expecting a monthly gain of 0.1%.

Personal spending rose 0.4%, three-tenths above the previous month's 0.1% increase and above the consensus call for a 0.2% increase.

First-time claims for jobless benefits in the United States rose 35k to 380k following a 33k fall last week, while continuing claims rose to 3019k - both were higher than expectations.

North American fixed income markets are up and equities are mixed with yields on U.S. 10-year Treasury notes down 1.4 bps to 3.71% and Canadian 10-year CGBs down 0.8 bps to 3.58%. Futures on the Dow Jones industrial average are down 3 points to 12804. The Canadian dollar is down 0.0081 to 0.9839 USD and the euro is down 0.0144 to 1.54789 USD.

Yields on two-year Canadian government bonds are down 2.7 bps to 2.72%, five-year yields down 1.9 bps to 3.04%, 10-year yields down 0.8 bps to 3.58% and 30-year yields down 0.5 bps to 4.08%. The Canadian 10-year note is yielding 13.44 bps less than the U.S. 10-year note.

U.S. two-year yields are down 1.6 bps to 2.24%, five-year yields down 1.7 bps to 2.99%, 10-year yields down 1.4 bps to 3.71% and 30-year yields down 0.8 bps to 4.46%. The Eurodollar September 08 contract is up 2.5 ticks to 97.34. The 10/2 year spread widened 0.7 bps to 147.66. The yield curve is steeper with the difference in yield between the U.S. two-year and 10-year notes up 0.7 bps to 147.66 bps.

Yields on UK two-year bonds are up 0.7 bps to 4.43%, five-year yields up 0.8 bps to 4.37%, 10-year yields down 0.7 bps to 4.66% and 30-year yields flat at 4.50%.

U.S. equity market futures are mixed with contracts on the Dow Jones industrial average down 3 points to 12804, the S&P 500 flat at 1385 and the Nasdaq up 5 points to 1928.

European markets are closed because of the May Day holiday.

Asian markets were lower, with the Japanese Nikkei closing down 83.13 points to 13766.86 and the Hang Seng Index down 158.80 points to 25755.35.

The euro is down 0.0144 to 1.5479 against the USD, down 0.0007 to 1.5730 against the Canadian dollar and lower by 1.40 to 160.89 against the yen.

Against the U.S. dollar, the Canadian dollar is down 0.0081 to 0.9839 and the Australian dollar is lower by 0.0082 to 0.9355.

The U.S. dollar is up 0.03 to 103.94 against the yen and the pound is down 0.0062 to 1.9805 USD.

The Canadian dollar is down 0.83 to 102.27 against the yen and lower by 0.0098 to 2.0126 against the pound sterling.

The U.S. Dollar Index was up 0.4580 to 72.9670.

WTI crude oil is down $0.81 to $112.65 while the front month gold contract at the Chicago Board of Trade is down $8.00 to $857.10.

All data taken at 8:49 a.m. EDT.

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it