Another bad surprise on the inflation front in the United States, and rates are feeling the pinch, with a sharp deterioration in US T-Bonds: US T-Bonds are up +10pts to 4.295%, the '2-yr' is up +7pts to 4.691% and the '30-yr' is up +9pts to 4.44%.

US producer prices ('PPI') rose by 0.6% in gross terms in February (2 times more than expected) compared with the previous month.

According to the Labor Department, prices rose by an annualized 1.6% unadjusted and 2.8% excluding food, energy and business services last month, compared with annual rates of 1% and 2.7% respectively in January.

No surprise, however, for US retail sales, which rebounded by 0.6% sequentially in February, broadly in line with market expectations, following a 1.1% decline the previous month (revised from an initial estimate of -0.8%).

The Commerce Department, which publishes these figures, points out that, excluding the automotive sector (vehicles and equipment), US retail sales rose by 0.3% last month, following a 0.8% drop in January.

Finally, the Labor Department announced 209,000 new jobless claims in the USA for the week of March 4, a figure down by 1,000 on the previous week's revised figure (210,000 instead of the 217,000 initially announced).

In Europe, our Treasuries are suffering the contagion of the T-Bonds, with our OATs down +8.5pts to 2.87600%, Bunds +8pts to 2.4330%, Italian BTPs +14pts to 3.728%.
NB: INSEE has lowered its growth forecast for France to 0.00% for the 1st quarter and raised it from 0.2% to 0.3% for the second.
No better on the other side of the Channel, with Gilts down +12pts to 4.138%, the worst level since February 29: all the ground gained erased in 48 hours (starting from 3.90% on Tuesday morning, that's almost +25pts).





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