But perhaps the biggest impact of today’s inflation news will be on Tuesday’s $39 billion auction of 10-year Treasury notes.
Ten-year yields backed up to about 4.10% on Monday and held there overnight.
Fiscal policy twists were also in the background for Treasuries. U.S. President Joe Biden sketched his policy vision for a potential second four-year term on Monday, unveiling a $7.3 trillion election-year budget aimed at convincing skeptical Americans that he can run the economy better than Donald Trump.
Biden’s budget for the 2025 fiscal year, which starts this October, includes raising the corporate income tax rate to 28% from 21% and forcing those with wealth of $100 million to pay at least 25% of their income in taxes.
A proposal to bring down deficit spending by $3 trillion over 10 years would slow but not halt the growth of the $34.5 trillion national debt. Deficits would total $1.8 trillion in the 2025 fiscal year, 6.1% of GDP, before falling to under 4% over a decade, the White House forecast.
Overseas, Japan’s yen fell back and the Nikkei stocks benchmark steadied after Bank of Japan Governor Kazuo Ueda said the economy was recovering but also showed signs of weakness – offering a slightly bleaker assessment than in January in a nod to a recent batch of soft data on consumption.
That raised some doubts again about whether the BOJ would indeed pull the trigger on tightening monetary policy as soon as this month.
The dollar was firmer across the board ahead of the CPI report.
In China, mainland shares were firmer and Hong Kong’s Hang Seng jumped more than 3% — led by its tech sector.
Shares of China Vanke reversed early losses, climbing 0.6% as the country’s No. 2 property developer said its “current operation and refinancing are normal and financing channels are stable” after Moody’s on Monday withdrew Vanke’s ‘Baa3’ rating.
