Market Wrap – Fed and BoE speakers Out

European equity markets end on a stronger note as a number of Fed speakers hit the wires this afternoon, while we also saw Bank of England Bailey out talking up the inflationary pressures in the UK.

The German DAX finished +0.45% in the green, while Frances CAC rose by a similar amount at +0.45%. The UK’s FTSE 100 gained by +0.23%, and Spain’s Ibex eked out a smaller gain of just +0.04%.

BoE Governor Bailey was out this after talking up inflation as noted earlier. His comments did little boost the pound despite hinting at more rate hikes with comments such as “The current preoccupation is inflation” and “Inflation is unacceptably high”.

He added that the central bank “aim is to bring inflation down to the 2% target” and that “Headline inflation is expected to decrease significantly over the rest of the year.”

Steering away from inflation he added that “Enhanced digitalization should not be used significantly to shift the mix of commercial bank and central bank retail money towards the latter.”

Data earlier today also showed that New York Fed one year ahead expected inflation at the lowest level since April 2021. One year ahead inflation at 3.8% in June versus 4.1% in May, marking the lowest level since April 2021.

Data also showed that 3 year ahead expected inflation unchanged at 3% in June, and 5 year ahead expected inflation at 3% in June versus 2.7% in May. June home price expectations rise to 2.9% in June versus 2.6% in May. This is the highest since July 2022

Fed member Daly also spoke earlier, a notable hawk, she added that “US economic momentum continues to surprise” and the “Need for two more rate hikes this year to lower high inflation amidst a robust labour market.”

We also saw Fed member Mester speaking. Notably inflation was again on the table as Mester said “Fed will need to tighten somewhat further to lower inflation” and “Raising rates again will reduce risk of more action in future.”