July 13, 2022
Futures Slump as ‘Ugly’ CPI Bolsters Fed Hike Bets: Markets Wrap
Stock futures tumbled after a hotter-than-expected inflation report bolstered speculation on an aggressive Federal Reserve rate-hike path. The dollar climbed alongside bond yields.
S&P 500 contracts reversed gains sharply after data showed the June consumer price index rose 9.1% from a year earlier, the largest gain since 1981. Economists projected an 8.8% increase, based on the Bloomberg survey medians. US 10-year yields topped 3%. The euro briefly fell below $1 for the first time since 2002.
Euro Slumps to Dollar Parity for the First Time in Two Decades
The euro has suffered a swift and brutal slump this year, and now it’s crossed a major threshold for the first time in more than two decades: parity with the dollar.
The 12% decline is the result of multiple pressures, from the war in Ukraine to an energy crisis and the growing risk that Russia cuts off gas exports and pushes the euro area into recession. Add in central banks moving at vastly different speeds and an in-demand dollar, and some analysts say parity may not be the end point, but merely a stepping stone to further weakness.
China’s Trade Surplus Hits Record After Shanghai Reopens
China’s trade surplus hit a record high in June as exports surged after Shanghai emerged from its crippling Covid lockdown and outbreaks eased.
The trade balance climbed to about $98 billion last month from $79 billion in May, reaching the highest level in at least three decades. Exports in dollar terms grew 18% in June from a year earlier, beating economists’ estimate of a gain of 12.5%, to reach $331 billion, the second highest on record after December 2021.
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