Financial Markets Daily Report12 May 2023
Another session with mixed results across financial markets. The key themes were signs that inflationary pressures are abating coupled with data suggesting an economic slowdown. In the UK, the BoE raised policy rates by 25 pb to 4.5%, in line with expectations, while signalling that additional rate hikes are likely.
- Another session with mixed results across financial markets. The key themes were signs that inflationary pressures are abating coupled with data suggesting an economic slowdown. In the UK, the BoE raised policy rates by 25 pb to 4.5%, in line with expectations, while signalling that additional rate hikes are likely.
- On the data front, inflation edged down in April in China (CPI: 0.1% y/y from 0.7%; PPI: –3.6% from –2.5%) and in the US (PPI: 2.3% from 2.7%), reinforcing expectations that the disinflation process is ongoing. In addition, new jobless claims in the US rose more than expected last week, reaching the highest level since October 2021.
- In this context, sovereign bond yields edged down across the board, more notably at the long end of the curve. Equity indices, on the other hand, closed with mixed results, in the US also spurred by renewed concerns about the banking sector (the KBW regional banking index dropped by 2.4%). The USD also appreciated modestly against peers.