The risk tone was cautious and non-committal for most of this week, but inflation fears took centre stage. The rise in commodities helped push up inflation expectations which sent yields higher and the JPY to new levels of weakness. The RBA acted tough on inflation surprising markets with a 50bps hike and natural gas made fresh year highs as a winter shortage looms. The China 50 index finally broke higher as re-opening optimism lifted sentiment. Beijing registered zero infections outside of quarantine for 4 consecutive days this week indicating that China’s activity looks set to return, but will it? Is this the last chance to grab a bargain on the China 50 or is a pullback due?

Other key events from the past week

Key events for the coming week

  • USD: Interest rate decision, June 15: Expectations are that the Fed will hike by 50 bps next week. Investors will be very keen to see whether or not the Fed signals any concerns about signs of slowing US growth on Wednesday.
  • Terrific Tesla?: Musk’s magic touch? Will Tesla shares buck the summer slump?
  • GBP: Interest rate decision, June 16: Short-term interest rate markets are pricing in a 100% chance of a 25 bps rate hike this week. However, the BoE re-vised 2023 growth into negative territory at the last meeting sending the GBP lower. Will they do the same again?

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