Caution Dominates Markets Ahead of Key U.S. Data

Summary:
The global market outlook was broadly risk-off on Tuesday as global bond yields climbed, tech stocks retreated, and key inflation expectations in the U.S. edged higher. U.S. small business sentiment rebounded slightly but inflation concerns persisted. Traders showed caution ahead of Wednesday’s U.S. CPI release and the FOMC decision. Meanwhile, the BoJ hinted it may soon reduce bond purchases, and the Eurozone reported a decline in investor confidence.

🇺🇸 U.S. Data Adds Pressure to Global Market Outlook

Market Performance (June 11):

• S&P 500: -0.27%

• Nasdaq 100: -0.81%

• 10Y Treasury Yield: +7 bps → 4.47%

• USD Index (DXY): +0.3% → 105.28

Key Developments:

• NFIB Small Business Optimism rose to 90.5 in May from 89.7, but inflation remained the top concern.

• Treasury yields climbed across the curve ahead of Wednesday’s CPI and FOMC, where no rate change is expected, but the dot plot and press conference will be closely watched.

• CME FedWatch shows only 1 full rate cut priced in by December, a notable drop from earlier expectations.

• Apple (-1.9%) dragged tech lower as excitement over AI announcements at WWDC faded.

• Goldman Sachs revised its Fed cut forecast from September to November.

🇪🇺 Eurozone Adds Pressure to Global Market Outlook

Market Performance:

• STOXX 600: -1.00%

• German 10Y Bund Yield: +4 bps → 2.68%

• EUR/USD: -0.45% → 1.0730

Key Developments:

• Sentix Investor Confidence Index for June: -15.8 vs -12.5 expected, signaling waning sentiment.

• Political uncertainty surged in France as Macron’s snap election call increased investor unease, widening French-German bond spreads.

• ECB’s Lane and Simkus signaled gradual easing, but emphasized inflation risks remain persistent.

hese developments increased market pressure this week, particularly in the Eurozone region.

🇬🇧 UK Market Volatility Increases Before GDP Report

Market Performance:

• FTSE 100: -0.98%

• 10Y Gilt Yield: +6 bps → 4.26%

• GBP/USD: -0.38% → 1.2715

Key Developments:

• Gilts sold off alongside global bonds.

• Focus remains on upcoming UK GDP (Wednesday) and labour market data next week, critical for BoE’s rate path.

🇯🇵 Japan: BoJ Policy Hints Stir Market Reaction

Market Performance:

• Nikkei 225: +0.25%

• 10Y JGB Yield: +2 bps → 1.01%

• USD/JPY: +0.6% → 157.25

Key Developments:

• BoJ policymaker Adachi hinted at potential tapering of bond purchases “soon,” citing inflation around 2%.

• Yen weakened on continued divergence from Fed policy, though expectations are rising for modest BoJ tightening later in the year.

🇨🇳 China Market Sentiment Weakens on Growth Fears

Market Performance:

• CSI 300: -0.55%

• USD/CNH: +0.15% → 7.275

Key Developments:

• Equities declined amid concerns over China’s slowing recovery.

• The yuan depreciated slightly as investors reassessed risks surrounding monetary support.