[1/2] Flowers are seen outside the Bank of England in the City of London financial district on May 11, 2023 in London, UK.Reuters/Henry Nichols
Vidya Ranganathan looks ahead to European and global markets
Several leading central bankers, including Fed Chairman Jerome Powell, are attending various events today to ensure investors get a rich commentary and much the same overview.
Bank of England’s Jonathan Haskell was the first to rise. The message from the BOE after last week’s 12th rate hike has been consistent: rate hikes are not over yet, the labor market is tight and the pace of quantitative tightening may even accelerate.
The pound, which has been rocked by weak economic data and a hawkish stance by the central bank, has further reacted to a broader dollar strength over Washington’s debt ceiling negotiations this week.
Global markets are optimistic and bullish as the week draws to a close. Optimistic that a US debt default can be avoided and bullish that markets can withstand higher bond yields triggered by the Fed’s latest wave of hawkish rhetoric.
Wall Street, US Treasury yields, implied US rates and the dollar all rose on Thursday.
The dollar has also been the driving force behind the recent depreciation of the Chinese yuan to 7 yuan and the yen’s move, with its weakness providing further tailwinds for Japanese stocks (.N225), which are currently trading in the 1990s. It is the highest price since August. Caught in the “bubble” era of this country.
ECB’s Isabel Schnabel will speak later in the day, and the message is also solid that the European Central Bank will continue to raise borrowing costs until core inflation sustains and market rate cut expectations are misplaced.
G7 leaders kicked off a three-day summit in Hiroshima on Friday, where the focus will be on new sanctions against Russia and their rhetoric against China.
Key developments that could affect the market on Friday:
– G7 Summit (Japan)
Lecture/Event
– Isabel Schnabel, ECB (1600GMT), Jonathan Haskell, BOE (0945GMT)
– Fed Chairman Jerome Powell (15:00 Japan time), Governor Michelle Bowman, New York Fed President John Williams (12:45 Japan time)
Reporting by Vidya Ranganathan.Editing: Edmond Klaman
Our criteria: Thomson Reuters Trust Principles.
