📆 Tuesday, July 2
► European equity markets opened weaker but pared their early losses, benefiting from continued disinflation as core inflation came in slightly above expectations at 2.9% (vs. 2.8% expected), while headline inflation fell to 2.5% (in line with expectations), below May's 2.6%. The Stoxx Europe 600 is trading 0.5% lower, led by losses in the construction, commodities and automotive sectors. The French CAC 40 underperformed, giving back some of Monday's gains as the second round of elections approached. The British FTSE 100, on the other hand, was hardly changed. ECB officials, including President Christine Lagarde, signaled a cautious stance on further rate cuts and stressed that more evidence of easing price pressures was needed.
► US stock futures trade slightly lower in pre-market trading as investors prepare for key economic data and Federal Reserve Chairman Jerome Powell's speech at an ECB forum in Portugal. Government bond yields have fluctuated this year due to alternating concerns about the slowdown in US prices and persistently high interest rates. Our chief analyst sees concerns about reduced fiscal discipline under a possible second term of Donald Trump as the main reason for the recent steepening of the yield curve. The yield on 5-year securities has risen by more than 20 basis points in recent weeks. Strategists at major financial institutions such as Goldman Sachs, Morgan Stanley and Barclays are advising their clients to brace for continued inflation and higher long-term yields. JPMorgan suggests that it may be time to take profits on US Treasuries. Traders are also looking ahead to today's US job openings data.
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