Skip to Content
Global News Select

EMEA Morning Briefing: Investors in Wait-And-See Mode Ahead of Rate Decisions


Watch For:

UK employment outlook survey; trading update from Naturgy

Opening Call:

Shares could head higher in Europe on Monday, following Friday's gains on Wall Street. In Asia, stocks were mixed; Treasury yields were mostly higher, as markets priced in a Federal Reserve pause this month followed by a rate increase in July; the dollar advanced; oil dropped amid continuing demand concerns; gold retreated ahead of U.S. inflation data and the FOMC meeting.


European stocks could venture into positive territory on Monday after U.S. equities ended the previous week higher.

Investors are looking ahead to the U.S. May inflation data set for release on Tuesday, along with the Fed's monetary policy decision due Wednesday afternoon, as well as the European Central Bank and Bank of Japan's rate decisions on Thursday and Friday, respectively.

Markets are pricing in a 70% probability that the Fed will leave interest rates unchanged at a range of 5.0% to 5.25% after its meeting, according to the CME FedWatch tool

"Inflation is going in the right direction," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management, in a phone interview Friday. "I think we've seen the last of the rate increases."

"We're still getting the recession that continues to perpetually be six months away," he said. The market is making "somewhat of a valiant attempt to climb a wall of worry here."


The dollar was firmer in Asia ahead of this week's meetings of central banks, such as the Fed, the ECB and the BOJ.

It may not be wise to double-down on bearish dollar bets, said Mizuho Bank. The Fed is likely to keep a distinctively hawkish tone on a pause, not a pivot, it said.

The dollar could fall, but only marginally, if the Fed leaves interest rates unchanged at its June 14 meeting, MUFG Bank said.

The potential selloff should prove modest as the Fed should leave the door open to resuming rate hikes in July, while the ECB could pare back its "hawkish" messaging at its June 15 meeting, given weaker eurozone growth and inflation, MUFG said.

"We expect the ECB to signal that it is getting closer to the point where they are comfortable that rates have been hiked sufficiently." A surprise Fed rate hike will be required to inject renewed upward momentum in the dollar, it said.


Treasury yields mostly rose in the absence of macro news and as markets reduced bets on rate cuts this year.

Most bets remained on the Fed keeping the policy rate at 5%-5.25% now before raising it by 25 basis points in July.

However, while financial markets were betting the Fed will likely take a breather from its tightening campaign and "skip" an interest-rate hike when it meets next week, some market strategists still think a 25-basis-point rate hike is possible.

"Next week's decision is likely to come down to the wire, but we maintain our long-held view that the Fed will tighten rates by a final 25 basis points in June to a range of 5.25%-5.50%," said TD Securities.

"If the Fed decides to 'skip' the June meeting, we expect the decision to be accompanied by communication that leans hawkish, signaling a likely hike for July," it added.

Treasurys are likely to bear flatten sharply in the event of a rate hike, as the market pencils in the potential for more hikes in July, it said.

However, if the Fed passes on a hike, it expects the curve to bull steepen sharply even if the Fed continues to insist that it isn't finished tightening yet.


Oil futures fell amid a cautious mood ahead of meetings at major central banks.

This week will likely be a big one for oil as these central bank decisions should determine the short-term outlook for the global economy, said Oanda.

The Fed could deliver a hawkish skip and the ECB is still playing catch-up with its tightening cycle, it added.

Prices have failed to find much support in the wake of Saudi Arabia's decision to voluntarily cut more of its oil production in July. The Saudi cut would only remove one-third of a single day's worth of global oil production over the course of July, Sevens Report Research said. That will "not meaningfully impact supply and demand dynamics."

Meanwhile, subdued China data fed concerns over the outlook for energy demand. Uncertainty over demand from China continues to limit upside for crude, analysts said. Weaker-than-expected Chinese producer and consumer inflation readings on Friday were seen as a negative.


Gold edged lower ahead of U.S. CPI data and the FOMC meeting this week.

Traders looked to U.S. inflation data and the outcome of the Fed's monetary policy meeting, both due next week, as the catalysts for gold's next big move.

The CPI data may determine whether the Fed decides to pause this month or raise rates again by 25 bps, said Oanda.

A hawkish pause could be the best the markets can hope for, barring a very promising inflation reading, it said.

The precious metal has been "consolidating after the recent run-up off the fourth-quarter lows," said Libertas Wealth Management Group.

Investors are "nervous," it said. "Owners of the yellow metal don't want to see their portfolios implode because of a surprise Fed statement, so caution is the name of the game this next few trading days."

"Although markets widely expect the Fed to (leave) rates unchanged, a hot CPI report before the decision on Wednesday could strengthen hawks, leading to a potential surprise," FXTM said.


Copper fell in a likely technical correction after prices reached a one-month high Friday.

The macroeconomic backdrop for the base metal remains shaky, with the FOMC rate decision due this week, TD Securities said.

Also, Chinese officials seem to have little appetite for a large-scale stimulus package and could prefer targeted policies that may do little to boost commodity demand, it added.



Companies, Big Investors Sell Shares at Fastest Rate in Years

Companies and their largest investors are selling shares at a pace not seen in years as stock prices rebound.

Since the end of April, companies and private-equity firms have sold more than $24 billion worth of stock in so-called follow-on sales, according to Dealogic. More than $17 billion changed hands in May alone, well above the $6.9 billion monthly average last year. The sales were done at smaller discounts than usual, on average, reflecting a robust market.


Andreessen to Open London Office for Crypto Startups Amid Scrutiny in U.S.

Andreessen Horowitz is trying a new approach to crypto after a bruising year in the sector.

The famed venture-capital firm, known for its investments in Skype and Coinbase, is opening its first international office in London in the fall to back crypto startups based in the U.K., bucking a broader retrenchment taking place across the volatile sector.


Glencore Approaches Teck Over Its Coal Business

Swiss mining and trading giant Glencore has approached Canadian miner Teck Resources over buying its coal assets, according to people familiar with the matter, providing an alternative to Glencore's original proposal for a full-blown merger between the two miners.

Glencore's original merger offer is still on the table, these people said, but the company has indicated to Teck that it would also be willing to buy just the coal business-which it had previously valued at more than $8 billion-if that is the only asset up for sale.


Scotland's Ex-Leader Nicola Sturgeon Arrested in Party Finances Probe

Police arrested Scotland's former leader Nicola Sturgeon on Sunday as part of a probe into her party's finances, the latest twist in a scandal that has undermined the Scottish independence movement of which she is a key proponent.

The arrest follows allegations that more than GBP600,000, or about $750,000, of public donations raised in 2017 by the Scottish National Party to fund an independence referendum had gone missing. Scottish police declined Sunday to comment further on their investigation.


Ukraine's Offensive Begins With Ground Gained, Tanks Lost

ORIKHIV, Ukraine - In the first days of their big offensive, Ukrainian troops thrust their new Western tanks at several points along the Russians' defensive lines.

Some assaults went better than others.


Russia Arrests American in Moscow on Drug Charges

Moscow police have arrested an American musician living in Russia on drug charges that could carry a sentence of up to 12 years in prison, Russian news services reported Sunday.

Travis Leake, 51 years old, was arrested after police raided his apartment in Moscow last week and seized paraphernalia allegedly used for drug-dealing, state-run Russian news services said. Police also arrested Leake's girlfriend, news services reported.


U.S. Tech Giants Are Slowly Cutting Off Hong Kong Internet Users

HONG KONG-Bit by bit, American tech giants are shutting out users in Hong Kong, where moves by authorities to thwart online dissent are shifting the target from individuals to platforms such as Google's YouTube.

Alphabet-owned Google, San Francisco-based OpenAI and Microsoft have limited access to their artificial-intelligence chatbots in recent months in the global finance and business hub. In OpenAI's case, the restriction puts Hong Kong and mainland China alongside North Korea, Syria and Iran.


Write to


Expected Major Events for Monday

06:00/DEN: May CPI

07:00/CZE: May CPI

07:00/TUR: Apr Balance of Payments

08:00/BUL: Apr Trade with third countries - preliminary data

08:00/BUL: Mar Trade with EU Member States - preliminary data

09:00/CRO: May PPI

17:59/UK: CBI Economic Forecast

23:01/UK: 3Q Manpower UK Employment Outlook Survey

All times in GMT. Powered by Onclusive and Dow Jones.

Write to us at

(MORE TO FOLLOW) Dow Jones Newswires

June 12, 2023 00:15 ET (04:15 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.

Market Updates

Our Picks