- Data released on Tuesday showed UK unemployment fell to 4.7% in the three months to April and on Wednesday data from the Office for National Statistics (ONS) showed UK CPI hit 2.1% in May, exceeding the BoE’s target of 2%.
- Data from the ONS on Friday showed that UK retail sales fell unexpectedly in May. A recent poll by Reuters indicated that economists were expecting an expansion of 1.6%, so the 1.4% monthly decline was way off the mark. The Pound fell in response
- The big market mover last week was the announcement from the US Fed that two rate hikes could be expected as early as 2023, equity markets fell in response on the news.
- Our Breadth indicator turned neutral but our Momentum Indicator ticked higher.
- The latest Fed meeting that ended on Wednesday was the big focus of the week. As expected, policy was left unchanged but the US central bank brought forward the likely timing of interest rate increases. The Fed signalled two rate hikes as early as 2023 and raised inflation expectations. In a press conference after the meeting, Chairman Jerome Powell tried to play the announcement down by saying the projections should be taken with a “big grain of salt”. However, stocks fell after the announcement, the dollar and US Treasury yields spiked and gold fell. On Friday, St. Louis Fed President James Bullard shook markets further by saying that a rate hike was likely as early as next year.
- No indication was given on when the Fed’s bond-buying program might be cut back but Powell said “advanced notice” would be given before that happened.
- Data indicated US producer prices rose 6.6% over the past 12 months, the fastest increase on record.
- US retail sales fell more than expected, falling 1.3% in May.
- Our Breadth Indicator turned negative this week and our Momentum Indicator ticked lower again.
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