The race to the exit -Breaking
Saikat Chatterjee gives a look at what’s ahead for the markets.
Markets are about to witness a record-breaking week.
The European Central Bank surprised markets in July by indicating that rates would rise in July, but also that there could be a larger move to curb high inflation in September. However, the May U.S. inflation data may provide another surprise reading.
Expected to reach 8.3% for April’s headline inflation, this means there is pressure to raise rates quickly.
The Fed is expected to continue its aggressive policies, according to economists. According the most recent Reuters polls, analysts are expecting two rate increases of 50bps in June or July.
Pressure is mounting on other central banks, as the Bank of England (and Sweden’s Riksbank) are expected to raise rates next week. Next week, the Swiss National Bank will also meet.
The rush to end easy monetary policy has increased from Australia to Canada. However, markets are not happy with the fact that the soaring rate of inflation isn’t slowing down.
For the first week in a row, the average petrol cost for a family vehicle was 100 Pounds ($125.06). The pressure on households will only increase as summer approaches.
Tightening supplies due to lower imports from Russia are causing price pressure. Goldman Sachs (NYSE ) forecasts prices at $140 per month between July and September. That’s a 16% jump from current levels.
China’s COVID situation has become a concern again to investors. After community infections recovered, Shanghai placed more districts under lockdown and Beijing tightened regulations in one district.
The gloomy outlook is reflected in markets, with the world stock market set to experience its largest weekly decline in over a month. Meanwhile, the U.S. and European stock futures were in red on Friday’s last trading day.
While the euro struggles to maintain its $1.06 level, bond yields are slightly higher.
Markets should be more informed by Friday’s key developments
U.S. May inflation poll: 83%.
– State Street (NYSE): Credit Suisse denies any interest in purchasing it
China’s industrial inflation has fallen to a 14-month low, despite a global boom
Beijing approves Ant IPO revival after crackdown cooling-sources
– Meeting of Central Bank of Russia
Inflation survey by University of Michigan
($1 = 0.7996 pounds)