With world headlines focussed on first anniversary of Russia's invasion of Ukraine, the inflationary consequences that pounded world markets last year still smoulder.
But it's the pickup and stickiness in underlying"core" prices, excluding energy and food, that is irking the central banks and the Federal Reserve most of all. The Commerce Department showed inflation increased much faster than initially estimated in the fourth quarter of last year, with the core personal consumption expenditures measure that the Fed favours accelerating at a 4.3 per cent pace compared with prior estimate of 3.9 per cent.
Markets are now braced for three more quarter-point rate hikes from the Fed to at least 5.25 per cent-5.50 per cent, with no cut fully priced from there by yearend. At 4.71 per cent on Friday, two-year Treasury yields are close to cycle highs. Whether China now backs Moscow militarily as well as rhetorically is seen as one of the biggest global questions surrounding the war 12 months on and would mark critical juncture in Western relations with Beijing too - and in trade globalisation more generally.The dollar also rose against Japan's yen on Friday, with the Nikkei's 1 per cent gain bucking the dour weekend mood elsewhere, after comments by the incoming Bank of Japan chief.