On Friday, the dollar index resumed its growth on the back of positive macroeconomic data and rising Treasury yields. The latter consolidated above 1.60% after the publication of PPI data. US producer prices rose the most in February since October 2018 which is a testament to rising inflation in the manufacturing sector as the country begins to emerge from the pandemic.
According to the National Bureau of Statistics, the PPI increased by 2.8% on an annualized basis since February last year, accelerating by 1.1%. Without considering food and energy prices, the so-called core PPI increased by 2.5% over the previous year.
Investors and economists differed in their opinions regarding inflation forecasts, with some predicting that price pressures will continue to rise amid higher demand and government stimulus, while others predict short-term inflation.
Despite the rising PPI in February, the US Consumer Confidence rose in March. The University of Michigan preliminary Sentiment Index surged to 83 from 76.8 in February. That figure beat economists’ mid-point forecast of 78.5 and set a new annual high as an increase in vaccinations and tax breaks boosted optimism about the economic outlook.
University of Michigan study manager Richard Curtin said that the data indicated significant growth in consumer spending in the coming year, with the largest percentage gains in services. In early March, half of all consumers surveyed reported favorable economic development, while the majority of them are that optimistic because of being hired.
Against this background, the dollar index resumed its growth after a three-day correction. The S&P 500 is near annual maximum.
Main market quotes:
- S&P 500 (F) 3,938.88 +6.13 (+0.16%)
- Dow Jones 32,778.64 +293.05 (+0.90%)
- DAX 14,567.25 +64.86 (+0.45%)
- FTSE 100 6,801.20 +39.73 (+0.59%)
- USD Index 91.752 +0.075 (+0.08%)
