U.S. inflation hit its highest level in 40 years in March, which will increase pressure on the Federal Reserve to tighten monetary policy. China’s head of government called for accelerated stimulus to mitigate the effects of the spread of quarantine due to COVID-19. Business sentiment in the German economy deteriorated, with OPEC and the U.S. government issuing regular oil market summaries. Sony has invested in video game publisher Epic, and CarMax will report its earnings. Here’s what you need to know about the financial market on Tuesday, April 12.

1- U.S. inflation hits a new 40-year high

U.S. inflation hit another 40-year high as rising energy prices, supply chain disruptions and a tight labor market combined into one potent mix. The yield on benchmark 10-year CA Treasuries hit a new 3-year high of 2.80% the day before.

Analysts expect the overall annual inflation rate to reach 8.4% in March from 7.9% in February. The prime rate is expected to rise to 6.6% from 6.4%. The base effect means that the annual rate could peak this month. For this reason, it will be important to keep an eye on monthly rates to judge the strength of the current price trend.

Lael Brainard, Joe Biden’s nominee for Vice Chairman of the Federal Reserve, will speak at 12:10 p.m. ET (4:10 p.m. GMT), and Richmond FRB Governor Tom Barkin will deliver a speech at 5:30 p.m. ET (9:30 p.m. GMT).

2. China’s Premier called for stimulus to soften the blow of COVID-19.

Chinese Premier Li Keqiang issued his third warning on the country’s economic growth prospects in less than a week and called for an acceleration of planned stimulus measures.

“Authorities should add an element of urgency in implementing existing policies,” Bloomberg reported Li as saying.

There is still no end in sight to the restrictions affecting Shanghai, China’s largest financial center and a major manufacturing sector with a population of 25 million. The EU Chamber of Commerce estimates that half of its German members’ supply chains are either completely or severely disrupted by the restrictions, which now affect nearly 400 million people in varying degrees of severity, according to economists at Nomura.

3- The U.S. market is set for a mixed opening; CarMax and Sony reports are awaited

Stock indices in the US are expected to open slightly mixed later in the day as traders are reluctant to take pre-market risk ahead of the release of Consumer Price Index (CPI) data at 08:30am ET (12:30pm GMT).

By 06:15 a.m. ET (10:15 GMT), the Dow Jones futures were down 14 points, or less than 0.1%, while the S&P 500 futures were up less than 0.1% and the Nasdaq 100 futures were up 0.2%. The Nasdaq performed worse again on Monday, falling more than 2%, as fears of an interest rate hike again undermined the valuation models underlying many technology stocks.

Stocks that are likely to be in focus a little later are CarMax Inc (NYSE:KMX), whose quarterly earnings report comes at a time when the used car market is starting to show signs of softening, and Etsy Inc (NASDAQ:ETSY), which is facing a strike by salespeople after saying it wants to raise commissions.

Shares of Sony (NYSE:SONY) and video game makers may also attract attention after the Japanese company invested nearly $32 billion in Fortnite game publisher Epic Games.


4. European data deteriorated

Economic data in Europe continues to deteriorate.

The German ZEW economic sentiment index fell again to its lowest level since March 2020, with the think tank warning that the prospect of stagflation over the next 6 months “remains real.” German consumer inflation was confirmed at 7.3% in March.

Meanwhile in the UK, the monthly decline in those claiming unemployment benefits was the lowest in 6 months, while employment rose by just 10k in the 3 months to March, well below forecasts.

However, emerging markets continued to post more dramatic economic news, with Sri Lanka announcing that it will stop making external debt payments.

5. Crude oil price rebounded ahead of OPEC and EIA reports; API oil inventories data expected

Crude oil prices recovered from the recent sell-off triggered by news from China, with Brent crude trading back above $101 per barrel and WTI crude futures up 3.3% to $97.34 per barrel.

Austrian Chancellor Karl Nehammer said he had “no positive impression” after meeting Russian President Vladimir Putin on Monday.

The Organization of the Petroleum Exporting Countries will update its global supply and demand forecast in its monthly report a little later, while the U.S. will release its short-term energy outlook at 12:00 p.m. ET (4:00 p.m. GMT).

The American Petroleum Institute (API) will release its weekly estimate of U.S. crude oil and refined product inventories as usual at 4:30 p.m. ET (20:30 GMT).