Financial Markets Daily Report14 June 2023
A larger-than-expected decline in US inflation in May, from 4.9% yoy to 4.0%, increased the odds investors attach to a pause in the Federal Reserve interest rate hikes at today’s meeting. Nevertheless, core inflation declined by less than expected, from 5.5% yoy to 5.3%, pushing the Fed to, at the very least, maintain a hawkish tone.
- A larger-than-expected decline in US inflation in May, from 4.9% yoy to 4.0%, increased the odds investors attach to a pause in the Federal Reserve interest rate hikes at today’s meeting. Nevertheless, core inflation declined by less than expected, from 5.5% yoy to 5.3%, pushing the Fed to, at the very least, maintain a hawkish tone.
- In this context, equities rose in most advanced economies’ trading floors (with the S&P 500 and the Nasdaq reaching 14-months maximums) while yields on sovereign bonds rose on both sides of the Atlantic. Elsewhere, the USD weakened against most currencies and the euro fluctuated below $1.08.
- In commodity markets, brent oil prices rose by more than 3% on hopes that Chinese demand will increase after the PBOC cut interest rates by 10bp last night. In Europe, natural gas prices rose above 36€/MWh.
- Today the focus will be on the FOMC meeting, where we expect a pause in the hiking cycle.