ECB weighs yield control measures

Today's news headlines:

‘UK job vacancies hit another high in sign of tight labour market’. Staff shortages continue in the UK as job vacancies rose to 1.69 million for the week ending June 12th, with the most significant gains being seen in construction. The fall in employment participation was triggered at the start of the Coronavirus pandemic as lockdowns came into force, with many deciding not to return to the workforce. The shortfall in the supply and demand balance has been evident in other sectors, such as food and energy, which has pushed prices higher this year. (Bloomberg)

‘Italian bonds are back in favour as Lagarde looks to calm markets’. Italian bonds have paused their sell-off in recent days. The spike in yields was triggered by a lack of guidance around fragmentation risks in the Eurozone from the European Central Bank at last Thursday’s meeting. This morning, the spread between Italian and German ten-year bond yields has moved back to 200 basis points as ECB President Christine Lagarde insisted that yields will not be allowed to punch higher in weaker Euro area economies. (Bloomberg)


Today

Asian shares tipped lower in Japan, while China’s CSI 300 managed some gains. US equity futures have paused their recent sell-off with the exception of the Nasdaq, which is on course to open in the red. The Bank of Japan opted to stick with a dovish monetary policy this morning, putting pressure back on the Yen. Oil prices are higher this morning, with Brent adding 20 basis points.

Events

Bank of Japan Policy Balance Rate: -0.1% (est. -0.1%)
Eurozone Consumer Price Index y/y (May): 10:00AM
Eurozone CPI m/m (May): 10:00AM
US Industrial Production m/m (May): 2:15PM​​​​​​​

Interbank rates:
​​​​​​​

GBP/USD – 1.2304
GBP/EUR – 1.1693
EUR/USD – 1.0525
USD/CAD – 1.2960

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