Markets Hold Steady as Eurozone Inflation Surprises and US Data Looms Ahead

The eurozone inflation impact remains a dominant force shaping global market sentiment on June 5, as investors react to higher-than-expected CPI data and await key US releases including Nonfarm Payrolls and the FOMC meeting. The cautious tone is reflected in US equities, bond yields, and forex markets, while commodities stay sensitive to global demand signals.

🇺🇸 US Jobs Data in Focus After Eurozone Inflation Spike

• Markets: S&P 500 closed flat (-0.02%), Dow Jones +0.36%, Nasdaq -0.33%. The 10-year yield eased slightly to 4.40%, while the dollar index held steady near 104.2.
• Key Developments:
  • Markets remained cautious ahead of Friday’s NFP and next week’s FOMC meeting.
  • Fed’s Daly said the Fed is “in a good place to watch and wait”, pushing back on rate cut urgency.
  • ISM Services PMI and JOLTS Job Openings are due today (Wednesday), likely to impact rate expectations.
    
    

🇪🇺 Eurozone Inflation Impact on Bond Market

• Data:
  • Eurozone CPI (YoY) for May came in hotter-than-expected at 2.6% vs 2.5% forecast.
  • Core CPI rose to 2.9% from 2.7%, challenging the ECB’s easing narrative.
• Markets:
  • Bund yields rose 4bps on rate repricing.
  • Euro gained modestly to 1.0890 vs USD.
  • Euro Stoxx 50 ended +0.4%.
    
    

🇬🇧 U.K. Awaits GDP Print and BOE Commentary

• No major data released.
• Market focus is on Thursday’s GDP and BOE speakers for rate guidance.
• GBP/USD held firm above 1.2780.

🇯🇵 Japan: Inflation Worries Limit Yen Strength

• Nikkei 225 was down 0.22% as yen stabilized.
• USD/JPY hovered near 156.00, with investors watching for potential BoJ intervention.
• No new data, but Q1 GDP will be in focus next Monday.

🇨🇳 China: Stimulus Hopes Grow Amid Global Inflation Pressures

• Markets: Shanghai Composite +0.41%, Hang Seng +0.6%.
• No major macro releases, but expectations are rising for new stimulus ahead of the July Politburo meeting.

🌍 EMEA: Inflation Pressures Vary Across Emerging Markets

• Türkiye:
  • USD/TRY slightly higher at 32.43.
  • April trade deficit widened, adding pressure to current account outlook.
• South Africa:
  • Post-election uncertainty continues; rand weakened to 18.60 vs USD.
• Brazil:
  • Bovespa closed +0.8%; Real strengthened as Lula rejected populist fiscal proposals.

🛢️ Commodities Mixed Amid Eurozone Inflation News

• Oil:
  • Brent -1.1% at $77.25 despite surprise draw in API inventory (-4.1M barrels).
  • WTI at $73.20. OPEC+ uncertainty continues to weigh on sentiment.
• Gold:
  • XAU/USD flat at $2,325 as bond yields eased slightly.
• Silver:
  • XAG/USD -0.5% to $29.20.

Traders remain alert to the ongoing eurozone inflation impact, especially with rate expectations shifting across global markets.