Financial Markets Daily Report 06 July 2022
Risk aversion returned to the fore during a volatile session on Tuesday, as investors reassessed the risk of a global recession amid ongoing disruptions in gas supply in Europe and reports of new COVID cases in some regions in China.
- Risk aversion returned to the fore during a volatile session on Tuesday, as investors reassessed the risk of a global recession amid ongoing disruptions in gas supply in Europe and reports of new COVID cases in some regions in China.
- Natural gas prices rose further in Europe while, by contrast, oil prices fell notably, near 100 $/barrel. In Germany, the government unveiled new legislation for allowing it to provide financial support for energy companies.
- In addition, sovereign bond yields fell back, with the curve for the US Treasury inverting between the 10-year and 2-year maturity. Bond spreads across the eurozone periphery widened while equity prices declined in Europe but were mixed in the US. In FX markets, the EUR/USD exchange rate dropped below 1.03.
- Today, the key focus will be on the release of the accounts of the June 14-15 meeting by the Fed. The service ISM for June in the US will also be published as well as manufacturing orders in Germany (up by 0.1% m/m in May).