Financial Markets Daily Report14 July 2022
A shocking inflation release in the US centered the stage yesterday in financial markets. Headline CPI rose in June by 9.1% y/y and 1.3 m/m, reinforcing the Federal Reserve intention to raise rates by 75bp again at its July meeting. Additionally, investors have started to price in a 100bp hike, in line with yesterday's decision of the Bank of Canada.
- A shocking inflation release in the US centered the stage yesterday in financial markets. Headline CPI rose in June by 9.1% y/y and 1.3 m/m, reinforcing the Federal Reserve intention to raise rates by 75bp again at its July meeting. Additionally, investors have started to price in a 100bp hike, in line with yesterday's decision of the Bank of Canada.
- In this context, stock indices declined in advanced economies and edged modestly up in Asia and Latin America. In fixed-income markets, yields on sovereign bonds increased, particularly so in the short-end of the yield curves which tends to be more sensitive to immediate monetary policy decisions.
- Elsewhere, the euro traded momentarily below parity against the US dollar and the price of European natural gas rose as maintenance works in the Nordstream pipeline continue.
- Today the European Commission is expected to release its summer economic forecasts.