Headlines: Cooler US inflation gives markets a bit of a breather USD/JPY shrugs off the surprisingly soft US CPI as Middle East crisis keeps inflation risks alive ECB policymaker Nagel says interest rates are at appropriate level after June’s decision ECB policymaker Panetta…
ys ECB’s goal is to keep inflation expectations firmly anchored, limiting second-round effects ECB policymaker Stournaras says renewed US-Iran conflict reignited inflation and growth worries PBOC reaffirms to continue implementing appropriately loose monetary policy Spain headline annual inflation confirmed at 3.2% in June Euro area industrial output falls in May, missing on estimates Markets: WTI crude up 0.6% to $79.85 European indices lower, DAX down 0.8% S&P 500 futures up 0.1%, Nasdaq futures up 0.4% AUD leads, CHF lags on the day 10-year Treasury yields up 2.5 bps to 4.61% Gold down 0.5% to $4,032 Bitcoin up 0.2% to $64,652 It was a slower session with little notable headlines to work with in European morning trade. As such, markets are afforded a bit of a breather in digesting the latest US-Iran developments alongside the softer US June CPI report from yesterday
Oil prices continue to hold higher as Middle East tensions remain heightened, with WTI crude up 0.6% to $79.85 on the day. A firm break of $80 remains the next key test for traders at the moment. Meanwhile, the US dollar is recouping some losses from yesterday but the moves are relatively light so far on the day.
EUR/USD is flat at 1.1418 but down from around 1.1440 earlier with USD/JPY also inching up by just 0.1% to 162.35 from around 162.00 earlier in the day. With all that is happening, the bond market is perhaps the one key spot to be wary about with long-end yields quickly climbing back up. 2-year yields in the US may be up to 4.21% only, still much lower from the high yesterday near 4.30%. However, 10-year yields in the US are now back up to 4.61% with 30-year yields pushing back up to 5.12% today.