UK inflation continues its rise

Today's news headlines:

‘UK inflation rises to new 40-year high with more gains expected’. UK inflation hit 9.1% in May as consumer prices continue to rise. The Bank of England expects inflation to rise above 11% in October when energy bills are set for their next leg higher as Ofgem reviews its price cap. Non-essential purchases have been scaled back according to a recent survey, with 60% of adults reducing this type of spending. Markets are pricing in an implied policy rate of 3% by the BoE by the end of 2022 as the central bank tries to bring down inflation. (Bloomberg)

‘Crude oil buckles as recession angst rattles commodity investors’. Oil prices have fallen this morning following renewed recession fears and the possibility of a tax holiday on gasoline in the US. WTI is down 5% so far today as US President Joe Biden is expected to try and push through an 18.4 cents per gallon tax holiday heading into the summer. Biden is due to speak on the matter at 7PM today. (Bloomberg)   


Today

Asian markets sold off overnight following worries of a potential economic downturn as central banks pursue tighter monetary policy. European shares have followed suit while US futures point lower. Commodity prices have suffered broad-based declines while the US Dollar has rallied with safe havens in favour.

Events

UK Consumer Price Index y/y (May): 9.1% (est. 9.1%)
UK Producer Price Index Input m/m (May): 2.1% (est. 1.8%)
UK Monetary Policy Committee member Jon Cunliffe speaks: 9:40AM
US Federal Reserve Chairman Jerome Powell testifies: 2:30PM
US President Joe Biden speaks: 7:00PM​​​​​​​

Interbank rates:
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GBP/USD – 1.2175
GBP/EUR – 1.1610
EUR/USD – 1.0487
USD/CAD – 1.2981

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