Dear Reader,

Here is an overview of today's economic news and market action:

• Euro Stoxx 50 gained 0.6% yesterday. S&P 500 flat for the day …
• Bond yields moved higher across the board …
• Currency-wise, the main pairs continued to operate in narrow ranges …
• EUR/USD opens up above the $1.09 threshold …
• GBP/USD is changing hands in the lower half of $1.24-1.25 …
• EUR/GBP remains in the top half of 87-88p …
• US CPI inflation data (Mar) and the latest Fed meeting minutes are due today …

Reversal of Fortune

• March has seen a welcome sharp fall in headline inflation in the Eurozone.
• Wholesale energy prices have been in marked decline since last summer and are now below the levels that prevailed ahead of the Russian invasion of Ukraine
• A recent excellent paper from the ECB (How tit-for-tat inflation can make everyone poorer) clearly demonstrates that soaring profit margins are mainly responsible for the marked pick-up in domestic inflation

A Fine Margin

There was a welcome sharp fall in headline inflation in the Eurozone in March as the sharp jump in energy prices following the Russian invasion of Ukraine early last year started to drop out of the annual rate. Inflation fell to 6.9% from 8.5% in February and is now well below the peak level of 10.6% hit last October.

Ireland’s manufacturing sector crept back into contraction territory in March. Intakes of new orders and manufacturing production both decreased on the month following some tentative signs of improvement in February and consequently, firms scaled back input purchasing further.