(Corrects CPI forecast in first paragraph to 2.5% from 2.4%, no other changes to text)

April 13 – A look at the day ahead from Danilo Masoni.

Today’s focus is squarely on U.S. March inflation data which is expected to show a rise to 2.5%. Obviously the jump is down to base effects, especially from last year’s oil price collapse which markets are fully aware of. The question is how bond markets react to a figure significantly above-forecast.

Before the data, a degree of calm has settled in. The greenback is up from three-week lows and 10-year Treasury yields are up around two basis points, albeit almost 10 bps off recent 14-month highs. European and U.S. equity futures have eased, while volatility gauges languish at pre-pandemic lows.

Earlier, buoyant Chinese trade data highlighted the global recovery continues to gather steam, although gains in Chinese shares were capped by worries of tighter policy.

There’s some anxiety too what sort of results U.S. banks will report, starting Wednesday; U.S. earnings are seen rising 25% (and 47.4% in Europe) so potential for disappointment is high.

In corporate news, dealmaking continues apace. Asian food delivery firm Grab is eyeing a $40 billion valuation by merging with a U.S.-based SPAC, while Microsoft is buying artificial intelligence firm Nuance for about $16 billion.

Several Fed speakers be on the wires again on Tuesday, presumably helping sooth market nerves on inflation and the prospect of tapering.

Finally, another U.S. Treasury auction — of 30-year debt — after a sales of 10- and three-year paper went off smoothly on Monday, albeit with slightly higher yields.

Key developments that should provide more direction to markets on Tuesday:

* China’s exports grew at a robust pace in March in yet another boost to its economic recovery, while import growth surged to the highest in four years

* Britain’s economy grew by 0.4% on the month in February

* Russian foreign minister Lavrov in Teheran

* Fed speakers: Philadelphia President Patrick Harker 1600 GMT. At Minneapolis event, speakers include San Francisco Fed President Mary Daly, Atlanta Fed President Raphael Bostic, Bank of Kansas City President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren 1600 GMT

* Auctions: U.S. 30-year bond; Italian medium-long bonds; UK 50-year gilts

* UK retail sales BRC/Feb GDP/trade balance/industrial output

* German ZEW

* U.S. CPI March

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