Weekly Market Update: Last week, global markets stabilized after a volatile U.S. CPI release and the Fed’s hawkish hold. This weekly market update captures how softer inflation data boosted risk sentiment while political turmoil in Europe and cautious central bank actions shaped market direction. From the U.S. to China, traders are now shifting focus to Powell’s comments, BoE and SNB rate decisions, and upcoming CPI releases in the Eurozone and Japan.
🇺🇸 U.S. Weekly Market Update – Fed vs. Data Expectations
Past Week:
- CPI YoY (May) eased to 3.3% (vs. 3.4% expected), and Core CPI fell to 3.4% (vs. 3.5%), marking the slowest core increase since April 2021.
- The Fed held rates at 5.25–5.50%, as expected, but the new dot plot showed only one cut expected in 2025, down from three previously.
- Equity markets rallied post-CPI, with S&P 500 +1.6%, Nasdaq +3.2%, led by tech.
- U.S. Treasury yields dropped after CPI (10Y fell to 4.22%) but rebounded slightly post-Fed.
- Jobless claims jumped to 242K, the highest since August 2023, signaling some softness.
This Week:
- Focus turns to Fed speakers (Powell, Harker, Goolsbee) and retail sales data (Tuesday).
- Empire Manufacturing, Philly Fed index, and flash PMIs will offer more growth signals.
- Market pricing implies a 70% chance of a September rate cut, though the Fed remains data-dependent.
🇪🇺 Eurozone Market Update – French Politics Shake Bonds
Past Week:
- Political uncertainty in France sparked a sharp selloff in OATs (French 10Y spread +30 bps vs. Bunds) after Macron called snap elections.
- ECB left rates unchanged, as expected, after last week’s 25bps cut.
- Industrial production fell -0.1% MoM in April, indicating stagnation.
- Bund yields declined, but peripheral spreads widened on political risks.
This Week:
- Key data include Eurozone CPI final (Wednesday) and PMIs (Friday).
- Market will closely watch French political developments and potential implications for fiscal policy.
- Risk sentiment remains fragile due to rising populist momentum in Europe.
🇬🇧 UK – BoE in Holding Pattern as Inflation Cools
Past Week:
- UK GDP (April) rose 0.2% MoM (in line), driven by services, while construction declined sharply.
- Labor market data showed unemployment rising to 4.4%, wage growth still hot at 6%.
- Gilts sold off modestly as rate cut expectations pushed into Q4 2025.
This Week:
- BoE rate decision (Thursday) is key. Bank is widely expected to hold at 5.25%, with market focus on updated guidance.
- CPI (Wednesday) will be crucial ahead of the vote, with core inflation expected to ease to 3.5%.
- Sterling remains range-bound near 1.27 vs USD.
🇯🇵 Japan Watch – BoJ Disappoints, Yen Nears Intervention
Past Week:
- BoJ kept policy unchanged, disappointed markets by delaying any balance sheet reduction announcement.
- Yen weakened past 157.5/USD, close to intervention territory.
- PPI rose 2.4% YoY, indicating pipeline inflation pressure.
- Equities gained; Nikkei +1.4%.
This Week:
- Focus shifts to CPI (Friday) — core CPI expected to slow to 2.5%.
- Yen volatility may rise amid BoJ uncertainty and global rate repricing.
- MoF intervention risk remains elevated if USD/JPY breaks above 158.
🇨🇳 China – Weak Credit Data, But Output Surprises
Past Week:
- New yuan loans plunged to ¥950B (vs. ¥2.2T expected), suggesting weak demand.
- Industrial production (May) beat estimates at 5.6% YoY (vs. 5.2%), retail sales disappointed at 3.7%.
- Youth unemployment data was again withheld; real estate indicators remain under pressure.
- Shanghai Composite -0.6%, CNH traded near 7.26/USD.
This Week:
- PBoC 1-year and 5-year LPR decisions (Thursday) — markets expect no change, but some call for cuts.
- Market watching for new stimulus or credit easing steps, especially around property sector.
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