MORNING BID EUROPE-When doves cry

Kitco Media
By Reuters
Published:
Updated:
Reuters
A look at the day ahead in European and global markets from Ankur Banerjee Investors are feeling the heat as sticky inflation and a tight labour market revive good ol' fears of the Fed staying hawkish for longer. The market has succumbed to the Fed and is now pricing U.S. interest rates to stay above 5% for the year. Traders had been hoping for deep rate cuts by the end of 2023 in the face of an economic downturn, but a resilient U.S. economy has sent punters back to the drawing board.


Thursday's jobless report and hotter-than-expected inflation data have cast a shadow over Asian markets on Friday, with MSCI's broadest index of Asia-Pacific shares outside Japan at its lowest in more than a month and set for a third straight week in the red. The last time the index had a run like that was back in October, in the midst of peak hawkishness and king dollar's reign. This has pushed benchmark 10-year Treasury yields to their highest since late December, with the dollar at six-week highs.


Thursday's report showed goods and services prices increased, raising questions about the goods disinflation narrative, according to strategists from Saxo Markets.


Fed officials Loretta Mester and James Bullard added to the hawkish rhetoric as they cautioned that additional hikes were essential to ease inflation. UK retail data and French inflation data are on deck and will help investors to gauge the state of inflation in the region. The data comes a day after France's CAC 40 touched a record high while London's FTSE 100 continued its recent run of record highs. Meanwhile, in the cryptoverse, Reuters reported Binance had secret access to a bank account belonging to its purportedly independent U.S. partner and transferred large sums of money from the account to a trading firm managed by the cryptocurrency exchange's CEO, Changpeng Zhao. Key developments that could influence markets on Friday:


Economic events: UK retail sales, Swedish unemployment rate, French CPI data Speakers: Bank of England's Huw Pill, ECB's Gabriel Makhlouf, Norway Central Bank Governor Ida Wolden Bache <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Jobless claims ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Ankur Banerjee; Editing by Edmund Klamann)

Twitter: @AnkurBanerjee17;))
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