Financial Markets Daily Report13 June 2023
In the first session of the week, investors traded cautiously ahead of today's key inflation data release in the US and the upcoming central bank meetings in the US (where we expect the Fed to pause its aggressive rate hike cycle) and the euro area (where the ECB will most likely hike rates by 0.25pp).
- In the first session of the week, investors traded cautiously ahead of today’s key inflation data release in the US and the upcoming central bank meetings in the US (where we expect the Fed to pause its aggressive rate hike cycle) and the euro area (where the ECB will most likely hike rates by 0.25pp).
- The expectation of this somewhat more dovish tone from the central banks pushed sovereign yields lower and allowed equities to advance modestly across the board. In FX markets, the euro strengthened against most advanced economies’ currencies and fluctuated above $1.07.
- During the night, the Chinese central bank (PBOC) cut the seven-day reverse repurchase rate by 10bp to 1.9%, surprising market participants. It is the first cut since August 2022 and it signals the officials’ intention to step up the stimulus to boost the economic recovery after the exit from COVID-zero.