Global Markets: worry about the euro after US inflation data

The Federal Reserve will still be able to justify 50bps rate increases after summer despite the strong core inflation trend and the deep negative real policy rates.

Traders await US inflation data to determine if interest rates will be raised again by the Federal Reserve this month on a slipping stock market and a hovering euro against the dollar.

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In the Asia Pacific region, South Korea and New Zealand raised interest rates again, causing Europe's stocks to slump again.

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Furthermore, the FTSE in London, the DAX in Germany, and the CAC40 in France all declined 0.6-0.8% in addition to gas prices increasing 1.2%.

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Although Wall Street futures are pointing up, copper prices have fallen 30% since April, which is also a sign of global growth. Copper prices are also at a 20-month low.

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Investors were more concerned about U.S. inflation in the coming weeks than UK economic growth, which improved unexpectedly.

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According to Jim Reid, senior vice president at Deutsche Bank, there have been signs of a recession in the bond market.

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Every U.S. recession in the last ten years has been preceded by an inversion of the two-year/10-year Treasury curve.

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The Federal Reserve will still be able to justify 50bps rate increases after summer despite the strong core inflation trend and the deep negative real policy rates.

Global Markets