Forexlive Americas FX news wrap: Markets shrug off the higher CPI data
Forex news for North American trading on June 10, 2021
- US stocks close higher led by the NASDAQ index. S&P record close
- GameStop shares take a dip in non-stop slide -- spot the pattern
- RBA to move towards unwinding unconventional policy in July - BofA
- Oil settles back where it started after going for a ride
- The demand for bonds is relentless. 10-year yields near the May low
- US May budget deficit was $132B
- BOC Lane: Productivity growth will be stronger than expected
- U.S. Treasury auctioned off $24 billion of 30 year bonds at a high yield of 2.172%
- US official: Treasury action is routine and has nothing to do with nuclear deal talks
- Oil drops through $70 as US lifts sanctions on Iran individuals
- Sen Romney will propose infrastructure bill with gas tax indexed to inflation
- Three ECB governing council members wanted to reduce QE pace - report
- European equity close: Mixed bag, small moves
- UK covid cases continue to move in the wrong direction in highest reading since February
- 10 year yield moves below 100 day MA for first time since October 2020
- Lagarde Q&A: Overall message from meeting was 'steady hand'
- ECB boosts 2021 and 2022 inflation forecasts
- ECB raises 2021 and 2022 GDP forecasts
- Lagarde: Underlying price pressure remain subdued
- US May CPI +5.0% y/y vs +4.7% expected
- US initial jobless claims 376K versus 370K estimate
- The JPY is the strongest and the GBP is the weakest as NA traders enter for the day
The awaited CPI data came in a little bit higher than expectations. The month-to-month showed a 0.6% gain versus 0.5% estimate The Ex food and energy rose by 0.7% versus 0.5%. YoY the headline number rose to 5.0% from 4.7% and ex food and energy increased to 3.8% versus estimate of 3.5%. That is the bad news. The potentially good news is that if the price action starts to moderate going forward (i.e. has worked through the rental car and other "temporary" big risers), the peak may have been reached. and there will be a moderation back lower.
That is still a "hope" as filling jobs are pushing up wages, and supply chain issues continue to be a problem, but if the bond market is a forward-looking barometer for the trends, they are pointing toward the transitory inflation that the Federal Reserve members have been talking about.
Looking at the treasury market, the tenure yield is trading down -5.2 basis point to 1.439%. The high yield worked its way up to 1.533% soon after the release. That is quite a turnaround.
US stocks were also supported today, with flows into the Nasdaq leading the way. The S&P closed at an all time record high. The Dow rose modestly. Not fairing so well was the Russell 2000 which fell by -0.68%.
The final numbers in Europe are mixed with modest changes.
In the forex, the market price action remained very up and down volatile for most of the major currency pairs. The GBP is ending as the strongest of the majors. The EUR is the weakest. The USD followed the rates lower and closed mostly lower with the exception being a small gain vs the EUR. The ECB today kept rates unchanged with no change in QE.
In other markets:
- Spot gold rose $11.10 or 0.59% to $1899.67
- Spot silver rose $0.23 or 0.86% to $20.01
- WTI crude oil futures is trading up $0.12 or 0.17% at $70.09. There was a brief selloff on headline news that Iran sanctions would be eliminated against an individual. However, a US official later said that the news did not imply a lessening of the sanctions against the country or all individuals for that matter