Global Markets Updates

The inversion on the US 2-year and 10-year yield curve accelerated on Wednesday to as much as 24.4bps, the most inverted in nearly 22 years.

Yield curve inversions are widely seen as precursors to recessions. US’ inflation jumped 9.1% YoY in June (May: 8.6%), the largest increase in more than four decades. On a monthly basis, the rise in headline CPI was 1.3%. Core CPI, which excludes volatile food and energy prices, rose to 5.9% YoY (May: 6.0%). The dollar index has gained 12.5% YTD amidst rising US interest rates.

Europe and US monetary policies divergence drives euro-dollar parity, high energy prices further drag on the euro.

Oil prices rise ahead of potential large US rate hike, with Brent breaking above $100pb, as investors weighed tight supplies against the prospect of a large US rate hike that would stem inflation and curb crude demand.

Gold faces selling pressures as higher interest rates hurt the non-interest bearing bullion.

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