Financial markets experienced a fairly volatile week as stronger-than-expected US inflation data and mixed corporate earnings cast doubt on the Federal Reserve's rate cutting timeline. The Fed's preferred PCE inflation gauge showed prices rising at a 0.4% monthly pace, equating to over 4% annualized, suggesting underlying inflationary pressures remain elevated.

In response, US Treasury yields rose to the highest levels since November, causing brief selloffs in equities. However, tech stocks showed surprising resilience, with the Nasdaq outperforming. The US dollar initially rallied before reversing gains, while gold continued climbing to new record highs on safe-haven demand and central bank buying, despite higher real yields typically being a headwind.

Major US banks reported solid Q1 results but struck a cautious tone on the outlook, with JP Morgan CEO Jamie Dimon warning higher rates are starting to stress the economy. The NFIB small business optimism index plunged to a 12-year low, signaling broadening weakness among SMEs at the heart of the US economy. The early release of weaker April consumer sentiment added to concerns the recent "reflation trade" may be losing steam.

Meanwhile, the commodity complex saw divergent trends. Oil prices remained firm on geopolitical risks despite a late-week pullback. However, iron ore prices softened on concerns around China's near-term growth prospects ahead of key Q1 GDP data. Gold's persistent strength in the face of rising real yields puzzled many investors, with explanations centering on precautionary buying by Asian central banks and gold's appeal as a hedge against potential debt monetization.

In Australia, housing finance rebounded in February as demand outweighed affordability constraints, while business conditions held up in March. However, consumer confidence dipped amid mounting living cost pressures and the RBA's hawkish hold.

In the  week ahead the US earnings season gets underway run earnest though the key tech sector results are still a couple of weeks away. China's Q1 GDP, industrial output and retail sales figures will be closely parsed for signs of rebounding domestic demand. March retail sales, industrial production and housing starts data should provide a clearer picture of the US economy's resilience.

The BoC and RBNZ both appear poised to keep rates unchanged, but the ECB could open the door to a June cut, making Thursday's meeting a potential catalyst. March CPI reports from the UK and Canada will help shape BoE and BoC policy expectations. US existing home sales and Eurozone consumer confidence could offer further insight into global growth headwinds.

Investors face a tricky and noisy few weeks as recent hopes for a Goldilocks scenario of easing inflation and a soft landing are tested by stubborn price pressures and nascent signs of economic slowdown. Ongoing banking sector stress and geopolitical risks add to the complexity. In this environment, market volatility is likely to remain elevated as investors scrutinize incoming data for clues on the path forward for growth, inflation, earnings and central bank policy.

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