June 17, 2022

Daily Report 17/06/2022

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The Bank of England increased interest rates by 25 basis points to 1.25% at the latest policy meeting which was in line with consensus forecasts. This was the fifth successive increase and the highest rate since early 2009. There was again a 6-3 vote as Haskel, Mann and Saunders voted for a 50 basis-point increase. The bank warned that inflation was likely to be above 11% later in the year as retail energy prices increase again and downgraded the growth outlook. It also stated that it would be forceful in combatting inflation with the scale, pace and timing of future hikes depending on their assessment of conditions. Money-market rates moved higher on speculation over a faster pace of rate hikes and gilt yields also increased after the release.

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The Euro lost ground ahead of Thursday’s New York open and dipped below a new low against the dollar with a reversal of US losses seen after the Fed meeting. German bond yields increased sharply with the 10-year yield above 1.80% which underpinned the Euro. The dollar also dipped sharply after the New York open with volatile trading and a sharp scaling back in long dollar positions

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US initial jobless claims declined slightly to 229,000 in the latest week from a revised 232,000 previously, but above consensus forecasts of 215,000 while continuing claims were unchanged at 1.31mn. The Philadelphia Fed manufacturing survey dipped to -3.3 for June from 2.6 previously and below market expectations of 5.5. There was a sharp dip in new orders into contraction territory with unfilled orders also declining while employment increased at a much slower rate. There was a slight easing of upward pressure on prices while companies were less optimistic over the outlook which maintained some doubts over US growth trends. There was very choppy trading after the US open with central bank decisions and risk trends leading to sharp moves across asset classes.

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12:45 US FED chair Powell speech