Market News – European Stocks in the red; tame CPI report & Fed’s hawkish tilt

Economic Indicators & Central Banks:

The double whammy of CPI and the FOMC proved very market moving. First, the tame CPI report elicited a very bullish response in Treasuries and on Wall Street.
The data boosted expectations for Fed rate cuts starting as soon as September, and totaling 50 bps for the year. Then came the FOMC where the dot plot surprised with a hawkish tilt. The rates have been edging off the lows since the FOMC announcement, the indications from the dots, and Chair Powell’s press conference. While the shift in the near-term dots to just one cut this year might have reflected a slightly hawkish stance, it was offset by the more-dovish 2025 dots reflecting five cuts.
Japanese investors sold the largest amount of foreign debt in 9 years amid a global shift in central bank policy. Net sales totaled ¥2.65 trillion ($16.9 billion)  through June 7, the highest since April 2015, following purchases of ¥2.3 trillion in May.

Asian & European Open:

Treasury yields plunged to their lowest levels since late March/early April on the data, but pared the gains after the FOMC.
Wall Street closed mixed, though, with S&P500 to 5,421 (first time over 5,400). The Dow was fractionally lower at the close.

European stock futures indicate a weak opening as Asian markets were weighed down by selling in Japan ahead of Friday’s central bank policy decision.

Financial Markets Performance:

The USDIndex finished at 104.70, below the session peak of 105.30, but above the post-FOMC low of 104.25.
USOIL edged lower after a 3-day advance as investors weighed an unexpected build in American crude stockpiles and the outlook for US monetary policy, which is expected to be tighter for longer.
Gold steady above $2,300.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.