Post-CPI party goes global

A look at the day ahead in European and global markets from Kevin Buckland

Hopes that the U.S. inflation genie is back in the bottle has given investors globally the confidence to snap up stocks and riskier currencies, at the notable expense of the dollar.

Wall Street’s rally to new records set up gains across Asia, boding well for the European open, with fresh all-time highs beckoning for the FTSE and DAX.

The focal point later in the day will be weekly American jobless claims for further evidence the labour market is also cooling down. The data set, which doesn’t usually garner so much attention, will be getting a lot more eyeballs after the surprisingly weak reading last week.

The market is back to betting squarely on two quarter-point interest rate cuts from the Federal Reserve this year, with the first fully priced for September, and July now in play.

Europe’s data calendar is relatively light, with Norway’s GDP release the highlight.

There are plenty of central bank speakers throughout the day though, with no less than four regional Fed heads speaking at various venues: Thomas Barkin, Raphael Bostic, Loretta Mester and Patrick Harker. Fed Vice Chair for Supervision Michael Barr also testifies before the Senate.

European Central Bank (ECB) speakers include Vice President Luis de Guindos, Bank of Spain Governor Pablo Hernandez de Cos, and Bank of Portugal boss Mario Centeno. Megan Greene takes the podium for the Bank of England (BoE) to talk about Britain’s labour market.

Market folk still see the ECB as likely the first among the biggest global central banks to cut rates, with June all but locked in by traders. The BoE could follow in just a matter of days though, with its June 20 policy decision a coin toss.

Key developments that could influence markets on Thursday:

-US jobless claims

-Norway GDP

-BT, Deutsche Telecom earnings

(This story has been corrected to say interest rate cuts, not hikes, in paragraph 4)

(By Kevin Buckland; Editing by Christopher Cushing)


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