Economic Indicators & Central Banks:
- Asian stocks and European futures kept to small ranges as focus turned to upcoming US inflation reports.
- JGB yields surged to their highest levels in over a decade amid growing speculation that the BOJ might raise interest rates soon.
- Former central bank executive Momma stated that the BOJ might opt to deduct its planned bond purchases next month in an effort to revive a bond market that has been largely impaired by its ongoing substantial purchases.
- BOJ Governor Kazuo Ueda emphasized the importance of the market determining long-term yields independently rather than relying solely on the central bank’s actions.
- UK wage growth remained solid amid a slowdown in the job market, providing further arguments for the BOE’s monetary policy hawks to await more concrete signs of easing inflationary pressures before considering interest rate cuts.
- Eyes today are on producer price data in the US, followed by consumer price data the next day, which will provide insights into whether the Fed will consider interest rate cuts later in the year or postpone them until 2025.
Financial Markets Performance:
- The USDIndex is steady at 105 lows.
- The Yen extended losses for an 8th day against the Greenback to a 2-week low. Currently USDJPY is at 156.45.
- EURUSD rebounded slightly to 1.0785, however overall holds within a downwards channel with key resistance at 1.0850.
- USOIL held steady ahead of the release of an OPEC market outlook, with traders eagerly awaiting signals regarding the extension of supply curbs. Despite a decline since April, oil prices have remained relatively high this year due to ongoing supply restrictions by OPEC and its allies, with expectations that these curbs will be prolonged into the second half of the year. Currently USOIL is at $77.78.
- Gold (-0.93%) declined further to $2338 per ounce. Copper rose at +2.46% and Platinum +0.54%.
Market Trends:
- The 10-year JGB yield to a 6-month high of 0.965%. The 2-year JGB yield, which closely reflects policy expectations, rose to 0.340%, its highest since June 2009. The 20-year and 30-year JGB yields also surged to their highest levels in 11 years and since July 2011, respectively.
- FTSE100 stands by record highs, the S&P500 is close to topping March’s record high. The Nasdaq rose by 0.3%, with four of the Magnificent Seven stocks rising. The Hang Seng has added 20% in a rally that is entering a fourth week.
- Alibaba and Tencent report earnings later today.
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Andria Pichidi
Market Analyst
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