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Today’s UK PMI helps to confirm market sentiment so far

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UK PMI data here was weaker than expected, and that reaffirms the kind of risk-averse sentiment we’re seeing so far in the session. Like previous Eurozone data, this only raises more questions about the BOE’s resolution and comes just a day after the raised bank rate by 50 bps in surprising motion.

Sterling traders were already worried that the aggressive path could end up breaking something in the economy along the way, and the already early stutter towards the end of Q2 is hardly reassuring. This will keep risk-on sentiment on edge when we look at US trading later, with bond yields holding lower for now.

10-year Treasury yields fell 7 bps to 3.728%, while US futures also continued to be more defensive. S&P 500 futures are now down 19 points, or 0.4%. In Europe, major indices are at least recovering slightly from early jitters, with the Eurostoxx down 0.4%, the DAX down 0.6%, the CAC 40 down 0.3% and the UK FTSE down 0.2% (compared to earlier losses of 0.6% to 0.9%).

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