Most global stock-markets rebounded strongly last week from losses the previous week – certainly in Europe and especially in the US after the release of improving inflation data and better-than-expected earnings reports from major US companies.
US CPI data came in at 3%, its lowest level since March 2021 and slightly better than expectations. This reduces pressure on the Fed to keep hiking although the market is still pricing in 90% odds that the central bank will hike again later this month. Even so, looking further out the market now sees less chance of further hikes. More evidence of lower inflation came from US Producer Prices data which showed a 0.1% increase – the lowest in nearly three years.
Bonds also rose on the data and the 10-year U.S. Treasury yield fell back below 4%. The US Dollar Index fell to its lowest level in more than a year.
In the UK, the Governor of the Bank of England, Andrew Bailey, restated his commitment to bringing inflation down saying that policymakers must “see the job through”. In his Mansion House speech last week he emphasised the “tightness” in the labour market and the fact that inflation had been “more sticky than previously expected”. The UK 10-Year Gilt Yield printed above 4.7% earlier this month, its highest level since Oct 2008. It has since fallen back below 4.4%.
UK Market Chart 14th July 2023
US Market Chart 14th July 2023
US Risk Barometer 14th July 2023
Europe Risk Barometer 14th July 2023
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