- Following a slower-than-anticipated rate of inflation in the UK, which relieved pressure on the Bank of England to aggressively raise interest rates, the pound declined and UK bonds drove a global rally. Europe's and the UK's stocks rose.
- As traders reduced their estimates on when the BoE rate will peak, yields on two-year UK government bonds fell. The yield had decreased by almost 50 basis points since last week's US inflation reading, which was weaker than anticipated. This is the largest decrease among developed-nation bonds. On Wednesday, Treasury rates decreased throughout the curve.
- Rate-sensitive real estate stocks drove advances in the STOXX 600 index of Europe, with UK homebuilders rising to their highest level since 2008 on hope for less drastic rate increases.
- Traders ease BoE hike bets after UK CPI data; peak now seen below 6%.
- UK investors shun bets for a 50 bps rate hike from the BoE in August, now seeing around a 65% chance of a 25 bps hike in August (Tues: 58% chance of 50 bps) - OIS curve.
- Goldman Sachs Q2 earnings missed estimates on FICC trading revenue, leading to an initial decline of 0.7%.
