Financial Markets Daily Report13 July 2023
A lower-than-expected reading of June’s US inflation led investors to project a lower path for the Federal Reserve’s interest rates. Concretely, headline and core inflation fell by 1pp and 0.5pp to 3.0% y/y and 4.8% y/y, respectively.
- A lower-than-expected reading of June’s US inflation led investors to project a lower path for the Federal Reserve’s interest rates. Concretely, headline and core inflation fell by 1pp and 0.5pp to 3.0% y/y and 4.8% y/y, respectively.
- In addition to these general figures, detailed components also offered a bright outlook for inflation returning to 2%. Shelter inflation, which accounts for more than 40% of the core basket of consumption, eased to 0.4% m/m and used vehicles inflation, which posted unusually high rates in the preceding months, fell to -0.5%.
- Elsewhere, the central bank of Canada hiked its policy rate by 25bp to 5% and New Zeeland’s paused after 12 consecutive months of hikes.
- In this context, yields on sovereign bonds declined markedly, equity indices rebounded across the board while the USD depreciated against its peers, trading above 1.11 against the euro.