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 says 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. Hot, hot, hot.
That could yet spill over and bite at risk sentiment some time later this week.
For now though, US stocks are keeping the calm still with S&P 500 futures up 0.1% and Nasdaq futures up 0.4%.
In other markets, precious metals are moving back down after the bounce yesterday with gold lower by 0.5% to $4,032 and silver down 1% to $58.03 on the day.
Up next, we have the US PPI report to follow up from the CPI report yesterday.
This article was written by Justin Low at investinglive.com.