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The Reserve Bank of New Zealand left its official cash rate at 5.50%, as expected, making for the first pause in the hiking cycle since August 2021.
Reserve Bank of New Zealand Leaves Rates Unchanged 5.50%, Inflation Remains Too High
Major European indices trade in positive territory.
STOXX Europe 600: +0.8%,
Germany’s DAX: +0.9%,
U.K.’s FTSE 100: +1.2%,
France’s CAC 40: +0.7%,
Italy’s FTSE MIB: +1.1%, Spain’s IBEX 35: +0.5%.Spain was the first EU member state to reach the 2.0% inflation target as CPI decelerated to 1.9% yr/yr in the reading for June.
Spain’s June CPI 0.6% m/m, as expected (last 0.0%); 1.9% yr/yr, as expected (last 3.2%). Core CPI 5.9% yr/yr, as expected (last 6.1%)
The Bank of England released the results of its latest stress test, which was passed by all banks.
Bank of England Governor Bailey said that policymakers will remain vigilant to how higher rates are being transmitted through the economy.
British Prime Minister Sunak said that the fight against inflation is more important than cutting taxes before the next election.
VMware (VMW 155.00, +3.47, +2.3%): Broadcom (AVGO) confirms it received conditional approval today from the European Commission to complete its acquisition of VMware (VMW)
Walt Disney (DIS 89.61, +0.12, +0.1%): exploring strategic options for its Star India business, including a joint venture or a sale, according to WSJ
Illumina (ILMN 184.45, -0.37, -0.2%): EU commission fines ILMN and GRAIL for implementing their acquisition without prior merger control approval
Netflix (NFLX 441.67, +1.46, +0.3%): UBS raised its price target to $525 from $390
Coinbase Global (COIN 89.40, +0.25, +0.3%): downgraded to Neutral from Overweight at Atlantic Equities
NVIDIA (NVDA 425.83, +1.78, +0.4%): in discussions to be anchor investor in Arm IPO, according to FT
Stellantis (STLA 18.33, +0.33, +1.8%): upgraded to Buy from Neutral at BofA Securities
Reviewing overnight developments:Total CPI for June was up 0.2% month-over-month (consensus 0.3%) with the index for shelter accounting for 70% of the increase. Core CPI, which excludes food and energy, was also up 0.2% month-over-month (consensus 0.3%), which was the smallest month-over-month change since August 2021.
On a year-over-year basis, total CPI decelerated to 3.0% from 4.0% in May, marking its smallest increase since March 2021, while core CPI decelerated to 4.8% from 5.3% in May.
The key takeaway from the report is that there is clear evidence of encouraging disinflation for both total and core CPI that should temper worries about the Fed raising rates again beyond its July FOMC meeting.
Treasury yields, which were already moving lower ahead of the CPI report, took a sharp turn lower in response to the data.
The 2-yr note yield is down 13 basis points to 4.77% and the 10-yr note yield is down seven basis points to 3.91%.
The S&P 500 futures are up 39 points and are trading 0.8% above fair value.
The Nasdaq 100 futures are up 161 points and are trading 1.1% above fair value.
The Dow Jones Industrial Average futures are up 236 points and are trading 0.7% above fair value.
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