The jitters returned to markets yesterday with a jump in European periphery bond yields not helping with the overall risk mood. That came after ECB president Lagarde failed to offer much clues about how the central bank will deal with fragmentation risks as they seek to tighten policy in the months ahead.
10-year BTP yields jumped by 22 bps to 3.68% - its highest late 2018 - as the bond selloff intensified in the region.
The lack of urgency by the ECB is getting markets worried though, as evident by the bond selloff. And risk sentiment also took a tumble yesterday with stocks sinking after more of a push and pull feel this week. The S&P 500 looks like it is finally breaking down after some consolidation in the past two weeks:
That's a tough drop to really ignore, at least from a technical standpoint. But the focus today will reside on the US inflation data, so let's see what that has to offer before getting back to this.
The dollar is seen giving back some of its gains from yesterday as we head towards European trading, with USD/JPY down 0.4% to 133.75 from around 134.20 earlier in the day. Meanwhile, EUR/USD is also up 0.2% to 1.0635 after threatening a push towards 1.0600 in the aftermath of the ECB policy decision yesterday.
There isn't much on the agenda to really shake things up in Europe, so expect some more pushing and pulling before we get a final release ahead of the weekend after the US inflation data.
0700 GMT - Spain May final CPI figures
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
