Macroeconomic/ geopolitical developments

• The S&P 500 and NASDAQ continue their positive momentum with record highs, while U.S. Treasury yields declined with softer-than-expected economic and inflation data.
• May’s consumer price index data showed a greater-than-expected cooling of inflation, with annual CPI dipping to 3.3%, core CPI rising by only 0.2%.

• US Federal Reserve officials expect one rate cut this year, maintaining a hawkish stance despite economic moderation, while market analysts anticipate two cuts following softer-than-expected CPI data.
• French and European markets tumbled amid political uncertainty following President Macron’s snap election announcement, with French bank stocks plummeting and borrowing costs soaring, driven by fears of a far-right victory and interventionist economic policies.

Global financial market developments

• US equity averages extended to new record levels, whilst European averages significantly underperformed, with the French CAC plunging lower.
• US and European bond were notably lower in yields on the week
• The US Dollar Index broke up out of consolidation to a new multi-week high.
• Gold futures were in negative consolidation mode after the prior week’s push lower.
• Oil futures consolidated the prior week’s bullish move.

Key this week

Central Bank Watch: Central bank focus will be on the RBA Interest Rate Decision on Tuesday, BoJ Monetary Policy Meeting Minutes Wednesday and PBoC and SNB Interest Rate Decisions on Thursday. But the main spotlight is on the BoE Interest Rate Decision and Monetary Policy Report on Thursday.

Macro Data Watch: The main macro data releases this week are inflation data from Germany, EU, and the UK and Retail Sales from China, Canada, US and UK, but with a critical global focus on the flash PMI data on Friday.

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