Financial Markets Daily Report20 July 2023
A lower-than-expected inflation data in the UK reinforced hopes among investors that disinflationary pressures are gaining traction, triggering a sharp depreciation of the British pound and a drop in the country’s sovereign debt yields.
- A lower-than-expected inflation data in the UK reinforced hopes among investors that disinflationary pressures are gaining traction, triggering a sharp depreciation of the British pound and a drop in the country’s sovereign debt yields.
- In particular, CPI inflation in the UK eased to 7.9% y/y in June from 8.7% in May, the lowest level over a year. On the other hand, core inflation in the eurozone was reported at 5.5% y/y in June, 0.1 pp above initially estimated by Eurostat. In addition, housing starts in the US fell in June after surging in prior months.
- In this context, equity indices closed with mixed results across Europe and in the US but fell in China. Sovereign bond yields rose modestly in Europe while commodity prices were little changed.
- Elsewhere, the Japanese yen depreciated against the USD after the Bank of Japan governor Ueda hinted that monetary policy accommodation is likely to remain in place for now.