Receive Free Stock Updates
Receive myFT Daily Digest every morning summarizing the latest stock news.
After inflation reached its highest level in 40 years on Wednesday morning, UK government bonds were under pressure, prompting the Bank of England to respond. Deaf traders had high hopes for more aggressive interest rate hikes.
The UK consumer price index rose 10.1% year-on-year in July, 0.3% higher than the consensus of economists and 0.6% higher than the June figure. it was high.
Fuel and energy costs were the main driver of price increases, but core inflation, which removes these volatile items, was also better than expected, at 6.2% on an annualized basis
Interest-rate-sensitive 2-year UK yields opened 0.13 points higher at 2.28%. The 10-year gold leaf yield rose 0.04 points to 2.17%. When bond prices fall, bond yields rise.
The move widened the spread between 2- and 10-year bonds to 0.14 percentage points, the widest gap since October 2008, according to Bloomberg data.
An 'inverted yield curve' (where short-term government bonds offer higher returns than long-term government bonds) has usually been seen as an indicator of a looming recession. The Bank of England expects the UK to be in a five-quarter recession by the end of the year.
HSBC Asset Management's Macro&Investment Strategist Hussein Mehdi said, ``It's hard to ignore the degree of income pressure households are currently facing, and the most vulnerable. It is likely that action will be taken to protect them," he said. “But overall real purchasing power remains very subdued, and with the Bank of England still hawkish, this year's recession is a fundamental consequence.”
overshadowed the stock market's quiet session. The FTSE 100, which weighs heavily on international energy and commodities companies, rose 2.05% this year but traded flat, while the pound was broadly stable against the dollar and euro, with the U.S. dollar It is trading at $1.21, up 0.1%.
The Europe region's Stox 600 index rose 0.2% for him. In Asia, Japan's TOPIX index rose 1.26% for him, while Hong Kong's Hang Seng index rose 0.9% after falling in the previous trade.
Britain's bleak picture contrasts with the US, where her recent CPI data suggests lower inflation.
Prime S&P 500 and technology-focused Nasdaq Composite posted modest gains on Tuesday, both of which he closed 0.2% higher. After consumer pioneer Walmart and his DIY retail chain Home Depot performed well. Futures contracts tracking the S&P 500 and Nasdaq 100 fell slightly on Wednesday morning.
Later on Wednesday, market watchers will get more clues about the Federal Reserve's anti-inflation plans when the July Federal Open Market Committee meeting minutes are released.
Concerns over global economic growth persist. Brent crude rose 0.9% on Wednesday before continuing its downtrend on Tuesday, dropping 2.9% to settle at $92.34 a barrel, while US marker West Texas Intermediate dropped 3.2%. It fell to $86.53 a barrel.
Oil prices, a barometer of global economic output, reached lows last seen in February and late January before Russia invaded Ukraine.