Financial Markets Daily Report29 June 2023
The outlook for monetary policy and inflation remained the key themes during a session with mixed results. On the one hand, risk appetite was lifted by a softer-than-expected inflation print in Italy (the headline HICP eased from 8.0% y/y in May to 6.7% in June). On the other, sentiment was spurred by hawkish signals from central bankers in Sintra.
- The outlook for monetary policy and inflation remained the key themes during a session with mixed results. On the one hand, risk appetite was lifted by a softer-than-expected inflation print in Italy (the headline HICP eased from 8.0% y/y in May to 6.7% in June). On the other, sentiment was spurred by hawkish signals from central bankers in Sintra.
- In particular, Fed Chairman Powell reiterated that “although policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough”. ECB’s Christine Lagarde echoed a recent call for an additional rate hike in July while BoE’s Andrew Bailey said he would do what is needed to bring down persistent inflation in the UK.
- In this context, sovereign bond yields fell while equity prices rebounded across Europe but closed mixed in the US. Oil prices recovered after data showed crude inventories in the US declined more than expected last week.
- Data today showed Spain's HICP inflation eased from 2.9% to 1.6% in June. German HICP data will be out later today.