Marketmind: The race to the exit
Reuters
Published Jun 10, 2022 02:34AM ET
A look at the day ahead in markets from Saikat Chatterjee.
A big week in markets is about to get bigger.
A day after the European Central Bank took markets by surprise by signalling not just rates lift off in July but possibly a bigger move in September to contain high inflation, May U.S. inflation data could show another hot reading.
Headline inflation is expected to match April's 8.3% reading, meaning pressure to go big and fast on rate hikes.
Economists expect no respite from an aggressive Fed -- analysts expect two 50 basis point rate hikes in June and July in the latest Reuters poll.
And pressure is rising on other central banks to follow suit, with the Bank of England and Sweden's Riksbank expected to hike rates again next week. The Swiss National Bank also meets next week.
While the rush to exit easy monetary policy making has accelerated from Australia to Canada, the bad news for markets is that soaring inflation shows no signs of retreating.
The cost of filling an average family car with petrol in Britain hit 100 pounds ($125.06) for the first time this week and the pressure is only expected to intensify on household budgets as the peak summer season gets underway.
Exacerbating the price pressure is tightening supply due to reduced imports from Russia. Goldman Sachs (NYSE:GS) predicts Brent crude oil prices to average $140 between July and September, a 16% increase from current levels.
China's COVID situation is becoming a worry again for investors after Shanghai put more districts in lockdown to conduct testing after community infections rebounded and Beijing tightened restrictions in another district.
Markets are reflecting the gloomy outlook with world stocks set for its biggest weekly drop in more than a month, while European and U.S. stock futures are in the red on the last trading day of a volatile week.
The euro is struggling to stay above the $1.06 levels while bond yields are a touch higher.
Key developments that should provide more direction to markets on Friday:
- U.S. May inflation: Poll: 8.3%, previous 8.3%
- State Street (NYSE:STT) denies interest in buying Credit Suisse
- Defying global surge, China's factory inflation hits 14-month low
- Beijing gives initial nod to revive Ant IPO after crackdown cools-sources
- Central Bank of Russia meets
Get The News You Want
- University of Michigan inflation survey
($1 = 0.7996 pounds)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.