Financial Markets Daily Report

Financial Markets Daily Report
02 June 2023

Investors continued to trade with a positive tone as US Congress passed a law suspending the debt limit until January 1st 2025 and after further evidence of disinflationary pressures in some countries, which, in turn, is likely to lead to lower interest rates than previously expected from central banks.

FMDR
  • Investors continued to trade with a positive tone as US Congress passed a law suspending the debt limit until January 1st 2025 and after further evidence of disinflationary pressures in some countries, which, in turn, is likely to lead to lower interest rates than previously expected from central banks.
  • In particular, euro area inflation eased from 7.0% to 6.1% y/y in May (core -0.3pp to 5.3%) with all the major subcomponents in the HICP slowing down. In addition, the release of manufacturing PMIs across the main advanced economies continued to show that industry activity is declining, with downward pressure on input and output prices.
  • In this context, yields on sovereign bonds edged down in the euro area and in the US while equities advanced in both regions and in emerging economies. In FX markets, the EUR strengthened against the USD and fluctuated above $1.07.
  • Today the focus will be on the US labor market report for May.
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