Oil prices fell and the dollar weakened after reports emerged that the US and Iran had agreed a 60-day extension of the current ceasefire, during which time there would be “unrestricted” passage through the Strait of Hormuz while negotiations on a permanent peace deal continue, though it seems Trump has yet to give this his ‘seal of approval’. Brent crude oil prices are at a circa 6-week low of around $92.5 per barrel, while the euro and sterling are trading at about $1.1650 and $1.3430 against the dollar respectively, off lows early yesterday of around $1.1590 and $1.3370. EURGBP continues to nudge very gradually higher, now at about £0.8670.
Yesterdays Events
Government bond yields ended lower on the day, falling by 3-6bps across the curve in the main markets. In equity markets, European stocks rallied off their lows but still ended in negative territory, while US stocks more than reversed early losses to close in the black for the day, with the S&P 500 setting a new all-time high in the process.
The minutes of the ECB’s end-April monetary policy meeting noted that “looking through” the energy price shock “was not appropriate”, and that the “primary focus” was now on “the most appropriate timing for a rate increase.” Indeed, a number of members said that they “would not have opposed raising rates at the current meeting had this been on the table”. It looks very much like a rate hike will be on the table at the June meeting though, with the market almost fully priced for a 25bps increase in the deposit rate to 2.25%.
PCE inflation data in the US were in line with expectations. Headline inflation rose to 3.8% in April (from 3.5% in March) mainly due to a further increase in energy price inflation, though core inflation – which excludes energy and food prices – nudged up to 3.3% (from 3.2%). The increase in the core rate was due to an uptick in housing inflation (to 3.2%), as core services ex housing inflation (3.5%) and core goods inflation (2.8%) were both unchanged from March.
The Day Ahead
For today, economic data already released a short while ago showed inflation in France and Spain rose further in May according to the ‘flash’ readings, while equivalent data for Germany, Italy and Ireland are published late this morning/afternoon. There are a number of central bank members scheduled to speak over the course of the day, including Bank of England Governor, Andrew Bailey.
Todays Talking Points 29.05.26
Market Commentary
Oil prices fell and the dollar weakened after reports emerged that the US and Iran had agreed a 60-day extension of the current ceasefire, during which time there would be “unrestricted” passage through the Strait of Hormuz while negotiations on a permanent peace deal continue, though it seems Trump has yet to give this his ‘seal of approval’. Brent crude oil prices are at a circa 6-week low of around $92.5 per barrel, while the euro and sterling are trading at about $1.1650 and $1.3430 against the dollar respectively, off lows early yesterday of around $1.1590 and $1.3370. EURGBP continues to nudge very gradually higher, now at about £0.8670.
Yesterdays Events
Government bond yields ended lower on the day, falling by 3-6bps across the curve in the main markets. In equity markets, European stocks rallied off their lows but still ended in negative territory, while US stocks more than reversed early losses to close in the black for the day, with the S&P 500 setting a new all-time high in the process.
The minutes of the ECB’s end-April monetary policy meeting noted that “looking through” the energy price shock “was not appropriate”, and that the “primary focus” was now on “the most appropriate timing for a rate increase.” Indeed, a number of members said that they “would not have opposed raising rates at the current meeting had this been on the table”. It looks very much like a rate hike will be on the table at the June meeting though, with the market almost fully priced for a 25bps increase in the deposit rate to 2.25%.
PCE inflation data in the US were in line with expectations. Headline inflation rose to 3.8% in April (from 3.5% in March) mainly due to a further increase in energy price inflation, though core inflation – which excludes energy and food prices – nudged up to 3.3% (from 3.2%). The increase in the core rate was due to an uptick in housing inflation (to 3.2%), as core services ex housing inflation (3.5%) and core goods inflation (2.8%) were both unchanged from March.
The Day Ahead
For today, economic data already released a short while ago showed inflation in France and Spain rose further in May according to the ‘flash’ readings, while equivalent data for Germany, Italy and Ireland are published late this morning/afternoon. There are a number of central bank members scheduled to speak over the course of the day, including Bank of England Governor, Andrew Bailey.
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