Analysts at ANZ explained that risk appetite rose overnight with US core inflation and unchanged BoE both signalling only gradual normalisation in interest rates.
Key Quotes:
“There was also limited follow through for markets from heightened tensions in the Middle East, which encouraged supported risk assets. Equities liked the contained inflation/rates environment with major US indices rising 0.7-0.8% (+3-4% last week) and Europe up 0.2-0.6%.”
“Fixed income rallied with US 10-year yields pulling back to 2.97% (-3bps). In the UK treasury yields fell 3-4bps with the BoE leaving rates unchanged and signalling inflation to cool faster in reaching its 2% goal.”
“Elsewhere the USD index couldn’t sustain its 93+ move with core inflation coming in 0.1% lower than expected at 2.1% y/y.”
“Commodity prices nudged higher with energy, metals and livestock leading the charge.”
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