Ending the week on a positive note, more central banks next week

Markets are ending the week on a positive note but there remains enormous uncertainty around inflation and interest rates that looks set to continue throughout the summer.

Expectations are changing considerably on a very regular basis, with markets now pricing in no rate cuts in the US this year but a strong chance of one more hike, which still falls short of the median two from the Fed dot plot. The central bank opted to buy itself time on Wednesday which may prove to be a good decision given the scale of tightening already seen and the progress we’re seeing across a selection of indicators.

The ECB on the other hand believes there’s still more to do, so much so that it insisted that barring material change, another 25 basis point hike will follow in July. Investors mostly took this on board but perhaps not as strongly as President Lagarde would have liked.

There are a number of other interest rate decisions to come next week, with the Bank of England being the standout, considering it’s one of the few central banks that appears to have achieved very little in its battle with inflation. CPI data released the day before may deliver another hammer blow to ambitions to pause the tightening cycle, bringing the UK another step closer to recession. Could the central bank move back to super-sized hikes?

Bitcoin near lows despite Blackrock SEC filing

Another fascinating week in the crypto space, which ends with Blackrock filing for a spot bitcoin ETF with the SEC, using Coinbase as Custodian. The same Coinbase that is currently being sued by the SEC for running unregistered securities exchanges. While this may be a big move over the longer term, you can imagine it won’t be a quick process which may be why bitcoin traders haven’t got too excited at this stage. In fact, it hit three-month lows on Thursday before rebounding to trade just below $26,000.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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