Global Markets Steady Amid Rate Cut Bets, China Deflation Concerns, and Central Bank Speculation Rising

This market update outlines key shifts across major global regions as the week closed with mixed sentiment. U.S. equities paused after Thursday’s CPI-driven rally, while the dollar weakened amid rising expectations of a Fed rate cut. Meanwhile, Eurozone and UK bond yields surged ahead of central bank meetings. In Asia, the Bank of Japan maintained its policy stance, and Chinese data revealed ongoing deflationary pressure. From equities to currencies, this market update reflects a cautious yet reactive environment across financial markets.

🇺🇸 U.S. Market Update – Dollar Slides, Fed in Focus

• Equities: S&P 500 closed flat (-0.04%), while Nasdaq fell -0.18% after its all-time high on Thursday. Dow Jones ended +0.15% higher.
• Treasuries: Yields slightly rebounded; 10Y yield rose 3bps to 4.22%.
• Dollar: DXY fell below 105, lowest in over a month.
• Data & News:
  • Markets priced in a 65% chance of a September rate cut, driven by this week’s soft CPI and PPI prints.
  • University of Michigan Sentiment Index fell to 65.6 (vs. 72.0 expected), inflation expectations edged lower.

🇪🇺 Eurozone Market Update – Rising Yields Ahead of ECB

• Equities: Euro Stoxx 50 rose +0.5%, led by autos and energy.
• Bonds: German 10Y yield rose to 2.60% (+5bps).
• Currency: EUR/USD climbed to 1.0715, aided by weaker USD.
• News: ECB members remained cautious; de Guindos emphasized the path forward remains data-dependent after last week’s rate cut.

🇬🇧 United Kingdom – BoE in Focus as Gilts Climb

• Equities: FTSE 100 gained +0.32%.
• Gilts: UK 10Y yield up 6bps to 4.23%.
• Sterling: GBP/USD traded at 1.2770.
• Ahead: BoE meeting next week; markets price in first cut by November, though June pause expected.

🇯🇵 Japan – BoJ Holds Rate, Yen Under Pressure

• Equities: Nikkei 225 rose +0.24%.
• Bonds: 10Y JGB yield steady at 1.05%.
• Yen: USD/JPY traded around 157.3.
• News: Market expects BoJ to maintain current rate (0.10%) on June 17, but possibly signal tapering of bond purchases.

🇨🇳 China – Deflation Concerns Prompt Stimulus Hopes

• Equities: CSI 300 rose +0.9%, led by tech stocks.
• Yuan: Offshore yuan firmed to 7.265 vs. USD.
• Data: CPI YoY flat at 0.3%, while PPI dropped -1.4% YoY – highlighting persistent deflation risks.
• Policy: Hopes rise for RBI or targeted fiscal stimulus following weak inflation data.