- On Wednesday, a flood of bad news swept through global markets, sending European stocks down the most in two months, plunging copper below $8,000, and wiping out this year's gains in Chinese equities.
- Every region had grounds for investors to be negative. There has been little movement in debt-ceiling talks in the United States, and investors are increasingly concerned about a default. China's stuttering economy and deteriorating geopolitical connections also weighed on morale, and UK inflation was greater than any economist predicted.
- In Europe, the high inflation report crushed any hopes that the Bank of England would hold interest rates steady. Money markets are now pricing in a peak BoE rate of up to 5.5%, implying a full percentage point of hikes until the end of the year.
- Citi: We now expect two further BoE interest rate hikes, rather than one, and no cut in November after the inflation data.
- EU banks are said to sail through early round of stress tests.
- UK financial markets price a 100% chance of a Bank of England rate hike at the June meeting after the CPI data (83% on Tues) - OIS Curve.
- ONS: UK Core CPI rate is at its highest since March 1992.
