Market sentiment was mixed on Wednesday. On the one hand, higher than expected US inflation data for January (headline: 0.5% mom, 3.0% yoy; core: 3.3% yoy)pushed back market expectations for the next Fed rate cut from early summer to the end of the year, and the probability of a second cut went down to virtually zero.
The White House said it will announce reciprocal tariffs by Thursday against any country that imposes duties on USimports. All this led to a rise in government bond yields on both sides of the Atlantic, while equity markets were mixed:the main US indices were weighed down by higher expected rates, while eurozone equities rose, boosted by financials.
On the other hand, Trump agreed in a phone call with Putin to start negotiating an end to the war in Ukraine, whichweighed on the dollar as demand for haven assets fell, causing the greenback to depreciate against most G-10 currencies.This also caused crude oil prices to fall, as an end to the war would increase global oil supply.
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