Traders ‘reduce bets’ due to European interest rate cut Korean media reports ‘US rate cut in September’
Investors are paying attention to the U.S. stock market due to the European Central Bank's (ECB) interest rate cut, and Korean media has begun to encourage betting by abusing reports of 'additional U.S. interest rate cuts'.
Traders have scaled back bets on further rate cuts this year, keeping the odds of a rate cut in September and December roughly even.
“Central banks are not in a hurry to ease policy,” Mark Wall, Deutsche Bank’s chief European economist, said in a statement on the 6th.
‘Maeil Business Newspaper’ reported on the 6th under the title <Signs of cooling in U.S. employment, support for interest rate cut in September>.
AP reports <ECB is cutting interest rates ahead of the Federal Reserve. However, it was reported under the title, “Future cuts may be limited.”
“Officials are struggling to strike a balance,” he said of the ECB’s first interest rate cut in five years on the 5th. “On the one hand, they want to cut interest rates in a timely manner, but on the other hand, they do not want to ease policy too quickly, which could revive inflationary pressures,” the NYT diagnosed.
The U.S. Department of Labor announced on the 7th that the increase in non-farm jobs in May was 272,000 compared to the previous month, and the increase was larger than Dow Jones' forecast of 190,000, causing stock market futures to decline and Treasury yields to soar.
CNBC featured asset management experts and reported diagnoses such as "The door is closed on an interest rate cut in July" and "There is little chance that the Federal Reserve will cut interest rates any time soon."
Investors are keeping an eye on the United States, where inflation has become stickier than initially expected, and Europeans are growing curious about whether what is happening now is a warning of what could happen in the future, but in Korea, the media focused on 'investment incentives' ahead of the media. did.
NYT said, “There is also skepticism about how much the ECB will be able to cut interest rates while the Fed waits,” and “A rise in interest rates in the United States will continue to tighten financial conditions in the United States and other countries due to the dollar’s global role, which in turn will “There is a risk of weakening the euro and causing inflation,” he said.
The NYT diagnosis expressed it as a ‘weakened attack,’ saying, “By cutting interest rates for the first time in five years, he signaled that he will move away from aggressive policies to prevent a surge in inflation.”
The ECB cut its three main interest rates by 0.25 percentage points for all 20 countries that use the euro, with inflation approaching the central bank's 2% target.
The base interest rate was lowered from 4% to 3.75%, which is the highest level in the bank's 26-year history where the base interest rate has been set since last September.
ECB President Christine Lagarde said at a press conference on the 6th, “It is now appropriate to ease the degree of monetary policy constraints,” adding, “Monetary policy has kept financing conditions constrained, weakening demand and maintaining inflation expectations well.” “It contributed greatly to lowering inflation again,” he said.
The Bank of Canada was the first G7 central bank to cut interest rates on the 5th, and central banks in Switzerland and Sweden also recently cut interest rates.
The NYT said, “Reluctance to ease policy is growing in the United States, and U.S. Federal Reserve officials are waiting to be confident that the recent stubborn inflation numbers will end,” and “The Bank of England is raising interest rates.” It opens the door to cuts, with some officials saying a rate cut could come this summer.”
Recent inflation data was stronger than expected. In particular, stubborn service industry inflation rose to 4.1% in May from 3.7% the previous month.
“Wage growth is rising and is expected to moderate throughout the year,” Lagarde said. “Monetary policy is keeping financing conditions constrained, which is weakening demand and keeping inflation expectations well in line, leading to a return to inflation.” “It contributed greatly to lowering it,” he said.
Europe's benchmark stock index rose to an all-time high before the interest rate cut was announced on the 6th, but gave up the gains as signals emerged that the central bank would be cautious about future interest rate cuts.
NYT said, “The central bank warned that there are still strong signs of price pressure, which means inflation will exceed the ‘2% target by next year.’” “The overall inflation rate next year will average 2.2%, exceeding the forecast three months ago.” “It is expected,” he said.
“With inflation falling but taking time to reach the levels central bankers want, the question now is how fast, how fast, and how deep future interest rate cuts by the Federal Reserve, ECB and others will be,” AP said. “Analysts say the ECB is likely to keep interest rates unchanged at its next meeting on July 18, pending further confirmation that inflation is under control,” the report said.