Feeling the pinch

Today's news headlines:

‘UK Cost of Living Squeeze Intensifies as Wage Growth Slows’. UK household spending power fell the most since modern records began, as wage increases were swallowed up by the fastest inflation in decades. Price-adjusted average earnings for April (excluding bonuses) were 3.4% lower than the previous year, while the average decline in the past three months through April was 2.2%—the most since 2011. The figures pile more pressure on British Prime Minister Boris Johnson to help support households after recent tax rises have added to the squeeze. (Bloomberg)

‘Inflation Data Likely Push Fed to Consider 75 Basis-Point Hike’. Officials at the Federal Reserve have been dealt another headache by Friday’s jump in consumer prices and inflation expectations, which could prompt them to consider the biggest interest-rate hike since 1994. The Fed is set to conclude its latest meeting on Wednesday, with Chair Jerome Powell previously hinting at another 50bps hike. However, upside surprises to economic data have caused markets to bet on a 75bps increase and are exacerbating the recent sell-off in stocks. (Bloomberg)


Today

European stocks rebounded after falling to their weakest level in over a year—although the dip-buying might not be enough to sustain current prices amid the backdrop of record inflation and hawkish central banks. The US Dollar’s trade-weighted index remains elevated ahead of this week’s Fed meeting.

Events

Japanese Revised Industrial Production: -1.5% vs -1.3% previously
UK Unemployment Rate: 3.8% vs 3.7% previously
UK Average Earnings Index 3m/y: 6.8% vs 7.0% previously
ZEW Economic Sentiment: 10:00AM
German ZEW Economic Sentiment: 10:00AM
US Producer Price Index & Core PPI m/m: 1:30PM

Interbank rates:

​​​​​​​GBP/USD – 1.2160
GBP/EUR – 1.1650
EUR/USD – 1.0440
USD/CAD – 1.2890

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.