- US equity futures were mixed ahead of inflation data that could help determine the Fed's tightening path. Bonds have been stabilised.
- Futures on the S&P 500 fell after the index fell 2.4% on Thursday, while contracts on the tech-heavy Nasdaq 100 held steady. The Stoxx Europe 600 index fell 1.5%, with losses across the board.
- Treasury yields have remained near 3%, while German government bonds have recovered from a selloff caused by the European Central Bank's shift toward aggressive policy and the possibility of a half-point interest-rate hike later this year.
- Investors will be paying close attention to the US inflation reading. A positive surprise would be a setback for both the Fed and the markets, casting doubt on how well rates are working to keep prices rising at a rate of more than 8%.
- UK Interest rate futures price in more Bank of England tightening, see bank rate at 3% by March 2023 MPC meeting.
- ECB's Holzmann: Estimates for neutral rate are near 1.5%.
- ECB’s Holzmann: September rate will be at least 25bps but could be 50 or something in between.
