Inflation is likely to take longer than expected to decline to the Federal Reserve's 2% target, Chair Jerome Powell says. "We've said at the [Federal Open Market Committee] that we'll need greater confidence that inflation is moving sustainably towards 2% before it would be appropriate to ease policy," Powell says. "The recent [inflation] data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence."

The yield on the 2-year Treasury has climbed as high as 5%, luring back buyers, even as the market struggles with negative sentiment. Investors are net long on Treasurys by the highest level in three weeks, according to a client survey by JPMorgan Chase.

Morgan Stanley has exceeded expectations by reporting a 14% increase in first-quarter profit and $3.4 billion in net income, up from $3 billion in Q1 of 2023, boosted by investment banking fees. CEO Ted Pick says he is "feeling good about this being early-to-mid cycle for the classic investment banking, capital markets business around the world." Pick also expects mergers and acquisitions to recover in the investment banking sector, saying they are an "existential reality" for firms. Bank of New York Mellon also topped expectations in Q1, with revenue increasing 2.5% year over year to $4.5 billion, compared with an expected $4.4 billion.

Stocks and bonds have faced turbulence since the consumer price index showed a higher-than-expected increase for March. But the Dow Jones Industrial Average ended higher Tuesday after Federal Reserve Chair Jerome Powell said the central bank likely would need to wait longer before cutting interest rates. The Dow ended a six-day losing streak and gained 0.2%, while the S&P 500 fell 0.2% and the Nasdaq composite fell 0.1%.

Fixed-income and equities traders at five of the biggest banks beat expectations in the first quarter, posting almost $2 billion more in earnings than expected. The surprise performance helped balance out lower-than-expected net interest income. Traders at Bank of America, Morgan Stanley, Goldman Sachs and JPMorgan Chase surged past analyst estimates.

The National Center for Public Policy Research and two individual investors are suing the Securities and Exchange Commission over allegations that the regulator's new market surveillance tool is unconstitutional. The lawsuit accuses the SEC of imposing "dystopian surveillance, suspicionless seizures, and real or potential searches on millions of American investors" through its Consolidated Audit Trail, a database that will collect real-time trading data.

The US economy's better-than-expected performance has helped boost the global economy, and Washington is working toward limiting risks to the global outlook, Treasury Secretary Janet Yellen has said. "American isolationism" was in the past "so while we expect that America's economic strength will continue to underpin global growth, we've also been engaging with the world to mitigate short-term risks and support sustainable long-term growth," Yellen added.

The Financial Stability Board has initiated a consultation on new guidelines for managing margin and collateral for nonbank financial entities such as commodity traders and asset managers, aiming to address vulnerabilities exposed by recent market disruptions. The guidelines focus on liquidity risk management, stress testing and governance and are tailored to specific challenges faced by nonbanks during volatile market conditions.

The International Monetary Fund expects global economic activity to grow 3.2% this year, an upward revision from the previously predicted 3.1%. The IMF also expects global inflation to fall from 6.8% last year to 5.9% this year, and to 4.5% in 2025, it said in a report.

China's regulators, the central bank and some of the country's largest banks are under an antigraft inspection as the country kicks off its first such investigation since 2021. The Ministry of Finance, the National Financial Regulatory Administration and the China Securities Regulatory Commission as well as the largest state-owned lenders will face on-site checks by anticorruption authorities.

There is more "demand-led inflation pressure" in the US than the UK, Bank of England Governor Andrew Bailey has said, adding there is "strong evidence" of UK prices falling. The remarks hint the UK could be able to lower rates before the US, as Bailey highlighted that the "dynamics of inflation" are different between the two countries.

Volatility index options have hit a six-year trading volume high at Cboe Global Markets, with 2.6 million VIX options traded Friday, overshadowed only by the so-called Volmageddon in 2018 when 4.3 million lots were traded. "Implied volatilities increased sharply across asset classes last week as US yields surged on the back of higher CPI (Consumer Price Index) inflation while Middle East tensions escalated," Cboe said.

We're thrilled to share that a Senior Law Enforcement Panel discussion will cap off our program at the 2024 Anti-Money Laundering & Financial Crimes Conference, featuring Andrea Griswold, deputy US attorney for the Southern District of New York, US Attorneys' Offices; Jonathan Larsen, northern area director of field operations for the IRS' criminal investigation agency; and Paul Roberts, the FBI's assistant special agent in charge; moderated by Saima Ahmed, SIFMA's executive vice president and general counsel. The conference happens May 6-7 in NYC. Space is limited -- register today!

On Monday, April 8 -- 50 days before the US transitions to a T+1 settlement on May 28 -- SIFMA, ICI, DTCC and Deloitte hosted a briefing via webinar to discuss what financial-services organizations are focusing on between now and the deadline. SIFMA's Tom Price describes the significance of the move to T+1 in this Pennsylvania + Wall blog post, which also includes links to key industry resources and a replay of the full briefing discussion.