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Market Recap – Rate cuts on the horizon

Friday, June 7, 2019 10:30 AM GMT

Mario Draghi announced that any potential rate hike will happen later than June of 2020 and emphasized on the prolonged uncertainties that puzzle markets. The ECB is confident that there is no probability of deflation or signs of inflation de-anchoring. Yet, in a response during the Q&A session of the press conference, Mr Draghi revealed that there has been some talking about the suitability of a rate cut or the introduction of new asset purchase program.

While Mario Draghi gave his press conference, simultaneously President Donald Trump announced that he plans to make a decision on the extra tariffs on $300 billion worth of Chinese products after the upcoming G-20 meeting at the end of June. As far as the announced tariffs on Mexican products are concerned, they will be imposed on Monday unless an agreement is reached at today’s negotiations.

Yesterday’s unit labor cost release for the US economy, reveals zero inflationary pressure, and favors a rate cut. The probability of a rate cut at the 31st of July FOMC meeting is now 55.8%.

Macro releases: Earlier today, the German industrial production m/m release has been negative. Later today, the focus will be on the US unemployment release, the US average earnings and the Canadian capacity utilization rate

 

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