July 04, 2023

Daily Report 04/07/2023

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The S&P Global/CIPS Manufacturing PMI for the UK in June recorded a reading of 46.5, which was higher than the previous figure of 46.2. British yields saw more than 1% increases, with the 2,5, and 10-year rates jumping to 5.35%, 4.73% and 4.44%, respectively. The interest rate futures suggest an 85% probability of a 0.5% rate hike in August by the Bank of England.

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The preliminary headline Harmonized Index of Consumer Prices for June has softened to 5.5% vs. the prior release of 6.1%. This was the seventh decline in price pressures in the past eight months. However, core inflation that excludes volatile oil and food prices decelerated marginally to 6.8% vs. 6.9% released earlier. European Central Bank President Christine Lagarde has already conveyed that the interest rate policy is not sufficiently restrictive to bring inflation to 2%.

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US ISM Manufacturing PMI for June dropped to the lowest level in three years, as well as staying below the 50.0 level for the seventh consecutive month, as it marked 46.0 figure versus 47.2 expected and 46.9 prior. Further details reveal that the ISM Manufacturing Employment Index slid to a three-month low of 48.1 in June from 51.4 previous readings but the New Orders Index improved to 45.6 from 42.6 marked in May and 44.0 market forecasts. Additionally, the ISM Manufacturing Prices Pair dropped to the lowest since April 2020, to 41.8, during the said month from 44.2 previous readings. On a different page, S&P Global Manufacturing PMI for June confirmed 46.3 figure, the lowest in five months, whereas the Construction Spending improved 0.9% MoM for May, versus 0.5% expected and 0.4% previous readouts.

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